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* Islamist militant group says behind attack

* At least 90 killed, 200 wounded – government

* Attack follows death of U.S. trainer on Sunday

(Adds Obama comments)

By Mohammed Ghobari and Tom Finn

SANAA, May 21 (Reuters) – A suicide bomber in army uniform

killed more than 90 soldiers in the heart of the Yemeni capital

on Monday and an al Qaeda affiliate threatened more attacks if a

U.S.-backed campaign against militants in the front-line state

did not stop.

The bombing, which wounded more than 200 people, underscored

the dangers Yemen faces as it battles Islamist militants

entrenched in the south and threatening shipping lanes in the

Gulf of Aden and the Red Sea.

The explosion left scenes of carnage in Sanaa’s Sabaeen

Square, where the military had been rehearsing for a parade.

Body parts lay strewn across a 10-lane road not far from the

presidential palace.

“We had just finished the parade. We were saluting our

commander when a huge explosion went off,” said soldier Amr

Habib. “It was a gruesome attack. Many soldiers were killed and

others had their arms and legs blown off.”

U.S. President Barack Obama said he was very concerned about

extremist activity in the country, a major front in its global

war on al Qaeda, and pledged continued help to counter it.

“That’s important for U.S. safety. It’s also important for

the stability of Yemen and the region,” he said at a NATO summit

in Chicago.

His counter-terrorism adviser, John Brennan, called Yemen’s

President Abd-Rabbu Mansour Hadi to convey Washington’s

condemnation of the attack.

Washington is increasing its military support for Hadi’s

government and the U.S. military has targeted militants in Yemen

with drones, which have frequently killed civilians and are

deeply resented by Yemenis, even the many who abhor al Qaeda.

Hadi, who took over after Washington and its Saudi-led Gulf

Arab allies persuaded his predecessor to step down to prevent an

uprising spreading anarchy in Saudi Arabia’s neighbour, vowed to

step up the fight against militant strongholds in the south.

“The war on terrorism will continue until it is uprooted and

annihilated completely, regardless of the sacrifices,” Hadi

said, according to a text published by the state news agency.

ROGUE SOLDIER?

One investigator said preliminary findings suggested the

bomber was a rogue soldier who had somehow evaded security

checks rather than a man in a disguise.

“The suicide bomber was dressed in a military uniform. He

had a belt of explosives underneath,” said a man who identified

himself as Colonel Amin al-Alghabati, his hands and uniform

flecked with blood.

The defence ministry said at least 90 soldiers had been

killed and 222 people wounded. The al Qaeda affiliate said it

had targeted the defence minister and army commanders.

The defence minister and chief of staff were both at the

rehearsal for Tuesday’s National Day parade — meant to

celebrate Yemeni unity – but neither was hurt. Yemeni officials

said Hadi had moved Tuesday’s parade to a military academy.

The wounded were ferried to hospital in taxis.

“Most of the injuries are to the head, we have dozens

paralysed. We expect the death toll to rise. Most of the injured

here are boys in their teens. Sanaa’s hospitals are

overwhelmed,” said doctor Mohsen al-Dhahari.

Exploiting turmoil resulting from months of protests that

helped topple former president Ali Abdullah Saleh, the militants

seized swathes of territory in the southern province of Abyan.

Medical aid charity Medecins Sans Frontieres (MSF) said many

civilians had been hurt in the latest fighting in the south.

A U.S. military instructor was seriously wounded in an

ambush on Sunday claimed by militant group Ansar al-Sharia

(Partisans of Islamic Law), which is affiliated to al Qaeda in

the Arabian Peninsula (AQAP).

The AQAP also claimed responsibility for the military parade

suicide attack, saying it was in response to the “crimes” of the

security forces in Abyan.

“We will take revenge, God willing, and the flames of war

will reach you everywhere,” it said.

DISMISSALS

In response to the violence, Hadi sacked two senior

commanders and allies of Saleh, whom he replaced in February.

One of them, a nephew of Saleh, was the head an intelligence

gathering unit that works closely with the CIA.

The army splintered into pro- and anti-Saleh camps during

last year’s revolt, hampering the campaign against militants.

“Hadi is serious about the confrontation, but he does not

have a grip on the whole security apparatus, security services

and the army in order to succeed,” said Saeed Obaid, a Yemeni

researcher of Islamist groups.

Monday’s bombing was the most deadly in a spate of attacks

in the impoverished state since Hadi, Saleh’s deputy, took over

from him in a process meant to end in democracy.

United Nations Secretary General Ban Ki-moon condemned the

bombing and urged Yemenis to support the political transition.

Analysts said it was hard to see how one attacker could have

caused so many casualties.

Saudi intelligence services said earlier this month they had

foiled a plot by al Qaeda’s Yemen-based wing to arm a suicide

bomber with an improved version of an “underwear bomb” of the

type that failed to explode on a 2009 U.S.-bound flight.

One analyst said the device used on Monday is unlikely to

have been a version of the underwear bomb, which appears to be a

comparatively small, high-tech device intended to cause a

puncture in the body of an airliner.

Jeremy Binnie, Middle East/Africa editor of Jane’s Defence

Weekly, added that the high death toll on Monday may have been

due to the fact the troops were in ranks, not crowded together.

At least seven militants and seven soldiers were killed on

Monday when Islamist fighters attacked an army position near the

southern town of Zinjibar, residents and an official said.

Yemeni troops closed in on the southern militant-held town

of Jaar on Sunday in heavy fighting, part of a new U.S.-backed

offensive launched earlier this month to regain control of

territory and towns seized by Ansar al-Sharia.

(Additional reporting by Mohammed Mukhashaf in Aden, Firouz

Sedarat in Dubai, Warren Strobel in Washington and William

Maclean in London; writing by Isabel Coles and Philippa

Fletcher; editing by Sami Aboudi)