KINSHASA - Congo's eastern borderlands risk plunging back into all-out war between the army and Tutsi rebels after the heaviest clashes in months, the U.N. peacekeeping mission chief said.

The enemies fought heavy battles last week in North Kivu province, where violence fuelled by simmering ethnic tensions has raged despite the official end of Congo's broader 1998-2003 war, a regional free-for-all over the country's mineral wealth.

Last week's fighting was among the worst since President Joseph Kabila's government signed a ceasefire deal with renegade Tutsi General Laurent Nkunda's rebels and around a dozen other armed militias in January.

The struggling peace process was plagued from the start by daily ceasefire violations, and talks to bring rebels out of the bush and integrate them into the army are at an impasse.

"There hasn't been as much progress as we initially thought, but we just have to keep after it," said Alan Doss, the head of the 17,000-troop strong U.N. peacekeeping mission in Congo, facing public protests for failing to end the conflict.

"What's the alternative? War? Who benefits from that? Certainly not the country. Certainly not North Kivu. And certainly not the population of North Kivu," he told Reuters.

Like other armed groups during over a decade of violence in Congo, Nkunda's National Congress for the Defence of the People (CNDP) is profiting from mining operations, experts say.

Government officials said this week they had closed and abandoned a border crossing into Uganda that had become a key source of revenue for Nkunda. Analysts said the move simply left the crossing -- and revenues from lucrative exports of cassiterite tin ore from North Kivu -- in Nkunda's hands.

The United Nations and international mediators have called on both sides to respect the ceasefire, pull back troops and let peacekeepers from the MONUC force set up buffer zones to prevent further fighting.

Both sides have so far resisted calls to disengage, and diplomats accuse Nkunda's CNDP of undermining the peace process by repeatedly suspending its participation in negotiations.

ANGER

Clashes between Nkunda's rebels and government troops flared again on Wednesday. Both sides accused the other of attacking.

"The situation has indeed become more unstable. And that is a worry," Doss said in an interview late on Wednesday.

Over 800,000 people have been forced from their homes by fighting in North Kivu since late 2006, in one of the world's worst conflict-driven humanitarian disasters. An estimated 5.4 million people have been killed since Congo's war began.

Angered by a lack of progress towards pacifying the tiny border province, and fuelled by rumours of U.N. collaboration with the rebels, thousands of protesters, many of them refugees, barricaded roads this week near the town of Rutshuru.

A convoy of international mediators was attacked by an angry mob on Tuesday. U.N. peacekeepers travelling through Rutshuru on Wednesday were forced to seek refuge in a MONUC base after protesters surrounded and burned one of their armoured vehicles.

The United Nations accuses local officials and politicians of manipulating protests, but Doss said it was understandable local people targeted by both army and rebels were frustrated.

But MONUC's overstretched force alone could not impose peace.

"We're protecting convoys. We're protecting U.N. installations. We've tried to protect major centres of population," he said.

"But that means we simply don't have enough people to have a soldier behind every tree, every field and every market, which is precisely where people are the most vulnerable."