Hospitals in Mogadishu overflowed with the wounded on Sunday and the death toll from mortar strikes on the city's sprawling main market reached at least 17.

Scores of civilians at the Bakara Market were hurt on Saturday when troops positioned at the Villa Somalia presidential palace returned fire against Islamist insurgents who attacked it with mortar bombs, witnesses said.

Abdi Hussein, a 25-year-old hawker, was selling a pair of sunglasses to one shopper when the shells detonated around him.

"The shrapnel tore into my legs. Three people near me died instantly," he told Reuters at the capital's Madina Hospital, where a nurse was treating him under a tree.

"The customer who was buying from me lost a leg," he said.

President Abdullahi Yusuf was meeting Ethiopian Foreign Minister Seyoum Mesfin at Villa Somalia at the time of the attack, but no one in the white-washed hilltop complex was hurt.

Residents said Ethiopian soldiers guarding Yusuf then began launching shells into Bakara in the city below. Seven people were killed in the part of the market used by money changers, witnesses said, while four others died in its food section.

One patient who did get a bed at Madina Hospital was Ahmed Nur Botan, who had been sitting close to the money changers and suffered wounds to his torso.

"I saw two people standing just a few metres from me and the shrapnel cut them to pieces," he said.

ANGER IN BAKARA

Ali Moalim Adde, Madina's deputy director, said two more victims died while being rushed to hospital, and four more had died on the operating table. About 50 wounded were admitted.

That brought the toll to at least 17, but a leader of the business community in Bakara Market said more people had died.

The market was teeming with Saturday shoppers when the attack occurred.

Ali Mohamed Siad told Reuters by telephone that 28 people had been killed, including traders, customers and porters.

"We believe the Ethiopian troops targeted Bakara deliberately," Siad said, adding that the market traders had hired their own guards to stop Islamist rebels using the area to strike at government forces and their Ethiopian allies.

"We have our own forces dressed in special uniforms with the consent of the president and prime minister ... insurgents are not allowed to carry out attacks from our zones," he said. "We tried to contact the president but his aides obstructed us."

Somalia's interim government has long said Bakara, which is infamous for its open-air arms bazaar, is a stronghold of guerrillas blamed for an Iraq-style insurgency of mortar blasts, assassinations and roadside bombings.

The fighting, which killed 6,500 people last year in Mogadishu alone, has sharply worsened what aid workers warn is a fast deteriorating humanitarian disaster.

More than 1 million Somalis are now internal refugees, and some 20,000 flee the capital every month. Most of them end up in areas suffering from the worst drought in years.