Heavy weapons fire breaks out in C.African Republic's capital

* Interim govt say clash with Christian militias

* Resident reports group of 40 armed men in street

* UN says two children beheaded in December

BANGUI - Heavy weapons fire rang out in the north of Central African Republic's capital Bangui early on Monday in what the government said were clashes with Christian militias.

French and African troops have struggled to contain violence between Muslim Seleka rebels and Christian militias that has already killed 1,000 people this month and displaced hundreds of thousands. "There was heavy weapons fire north of Bangui for a few hours and several neighbourhoods were affected," Amy Martin, head of the UN Office for the Coordination of Humanitarian Affairs in Bangui told Reuters.

A Reuters witness in the capital reported shell explosions and mortar fire, adding that it had stopped by late morning.

Heavy arms fire was reported in Bangui during a two-day spike in violence which began on Dec. 5 but reports of shooting in recent days has been limited to sporadic small arms fire.

Guy-Simplice Kodegue, spokesman for interim President Michel Djotodia said the fresh fighting was between government forces and members of the Christian militia, known as anti-balaka after the local Sango language word for machete.

He did not say whether there had been any casualties.

A local resident who didn't wish to be named said a group of around 40 men armed with Kalashnikovs assault rifles marched through northern Bangui on Monday, despite French-led efforts to disarm the population.

The country's Christian majority has complained of waves of looting and killing by Djotodia's loose band of militias who seized power in March with the aid of fighters from Chad and Sudan.

Violence intensified in early December after Christian militia launched reprisal attacks on Seleka forces, raising fears of generalised conflict in the country.

The number of internally displaced has swollen with the mounting violence and over 100,000 are sheltering in a makeshift camp at Bangui airport, a medical charity said.

CHILD BEHEADINGS

Kristalina Georgieva, EU aid chief, said that concerted international action was needed to prevent "an appalling tragedy from spiralling further out of control".

More than 800,000 people are now internally displaced within the country and a meeting with UN's humanitarian chief Valerie Amos is planned for Jan. 20 to coordinate humanitarian policy, Georgieva added.

UNICEF, the United Nations' children's agency, said on Monday that at least two children had been beheaded in this month's violence. "More and more children are being recruited into armed groups, and they are also being directly targeted in atrocious revenge attacks," said Souleymane Diabate, UNICEF Representative in the country.

Martin Ziguele, a former prime minister and leading opposition figure, called for the formation of a national commission to bring accountability for crimes. "There can be no true reconciliation without justice and forgiveness," he said in a statement.

Many say the bloodshed has little to do with religion in a nation where Muslims and Christians have long lived in peace, and have instead blamed a political battle for control of resources in one of Africa's most weakly governed states.

Central African Republic, racked by five coups and numerous rebellions since independence from France in 1960, is rich in diamonds, timber gold and oil.