An increasingly isolated Syria imposed retaliatory sanctions on former friend Turkey, but said on Monday it might agree soon to an Arab peace plan to avert penalties from Arab states over its eight-month crackdown on popular unrest.

In a display of muscle that could be intended to deter any idea of foreign military intervention in a crisis which has killed at least 4,000 people, the army staged a big exercise with missiles, rockets, tanks and helicopters.

Top generals watched the war games and state television made it their headline news story, as the death toll mounted.

Five civilians were killed by security forces in Homs, the country's third largest city, according to the activist website Syrian Observatory for Human Rights. Four died when troops fired on a funeral procession and one man was shot at a hospital. A youth died of gunshot wounds sustained at the weekend.

In southern Deraa province, three members of the security forces were shot dead by army defectors in front of the Dael courthouse, the website reported. The corpse of Ismail Aqla al-Amri, 35, was handed to back relatives in Deraa, a victim of state torture, it said.

Already hit by economic sanctions from the United States and Europe, Syria was punished last month by regional countries, with sanctions announced by the Arab League and imposed by Turkey, once President Bashar al-Assad's ally.

Syria responded to Turkish sanctions by imposing a tariff of 30 percent on its imports and prohibitive duties on fuel and freight. State news agency SANA quoted a pro-Assad economist as saying Turkey would be the biggest loser.

The Arab League's sanctions have yet to take effect. It has repeatedly extended deadlines for Damascus to agree to a peace plan that would see Arab monitors oversee its withdrawal of troops from towns. The latest expired on Sunday.

Foreign Minister spokesman Jihad Makdesi said Damascus was still looking at the plan.

The protocol is intended to be signed soon, he said. The Syrian government has responded positively to the draft protocol ... I am optimistic, although I await the Arab League response first.

Syria says the Arab proposal to admit observers infringes its sovereignty, and has asked for clarification. It has stalled more than once and reneged on promises to rein in its forces.

SANA expressed regret mixed with defiance of sanctions.

The Arab League sanctions ... have been a shock for every Syrian and Arab citizen ... as these sanctions came from sisterly countries, it said. Syria will overcome those sanctions by virtue of its strategic location and the diversity of its production sectors, the state agency added.

Syria's Arab neighbours Iraq, Lebanon and Jordan have all said they would not join a trade sanctions campaign.

ROCKETS

In a reminder to outsiders of Syria's powerful, mainly Russian-supplied armed forces, state TV and SANA showed top generals watching a live-fire exercise by missile units, mechanised brigades and aircraft, to test their capacity in confronting any attack on Syria.

It did not report the scale of the war games.

General (Dawood Abdullah) Rajiha stressed that the armed forces, under the leadership of President Bashar al-Assad will remain loyal to the homeland and will defend the interests of the Syrian people, SANA said. Rajiha is Minister of Defence.

Makdesi, the foreign ministry spokesman, said the war games were a routine exercise and not intended to send any message.

The first cracks appeared in one of the pillars of Assad's regime at the weekend with the desertion of some members of the secret police to the ranks of a rebel free army.

At least a dozen members of the secret police deserted from the Airforce Intelligence complex in Idlib city, 280 km (175 miles) northwest of Damascus, triggering a gunbattle with defectors in which 10 were killed or wounded on either side, activists said.

Opposition sources said a further 16 soldiers defected from units in Idlib on Sunday and a new group of defectors of similar size battled loyalist troops to the south, in the Josieh area on the border with Lebanon.

Assad's opponents estimate the strength of the rebel force at several thousand, mainly army recruits from Syria's Sunni Muslim majority. Members of Assad's minority Alawite sect, an offshoot of Shi'ite Islam, have a tight grip on the military and security apparatus.

The conscript armed forces have more than 200,000 men.

FAMILY KILLED

Government forces and militiamen loyal to Assad killed at least 30 civilians and five defectors on Sunday, mostly in Homs, Syria's third largest city, activists' reports said.

The state SANA agency said a civilian father and his three children were killed by an armed terrorist gang that broke into their house. Opposition activists said the family were killed by militiamen loyal to Assad, in a drive-by shooting.

Syrian authorities say they are fighting foreign-backed terrorist groups trying to spark civil war, who have killed some 1,100 soldiers and police since March.

SANA on Monday reported military funerals with flowers and wreaths for a further seven killed.

Burhan Ghalioun, head of the opposition Syrian National Council, said it was now a question of weeks before the regime collapses. But he offered no firm basis for his projection.

Maybe the regime will implode, or things will get more complicated, and it will take a very long time, he told Austria's Der Standard daily.

I hope that everything will go a lot faster thanks to international pressure, sanctions, the continuation of peaceful protests, the exhaustion of the security forces and especially the mercenaries.

(Additional reporting by Sylvia Westall in Vienna and Khaled Yacoub Oweis in Amman, Erika Solomon in Beirut)

(Additional reporting by Suleiman al-Khalidi and Patrick Werr; Editing by Peter Graff and Elizabeth Piper)