Turkey's parliament was poised on Wednesday to grant its army permission to enter northern Iraq to crush Kurdish separatist rebels based there, but Iraqi leaders stepped up a diplomatic offensive to avert any attack.

The United States, Turkey's NATO ally, is also strongly opposed to military action, fearing it will destabilize the most peaceful part of Iraq and possibly the wider region by encouraging other neighbors such as arch-foe Iran to intervene.

Turkish Prime Minister Tayyip Erdogan has played down expectations of an imminent attack, but the parliamentary vote will effectively give NATO's second biggest army a free rein to cross the mountainous border as and when it sees fit.

Ankara's stance has helped drive global oil prices to $88 a barrel, a new record, and has hit its lira currency as investors weigh the economic risks of any major military operation.

Fearing possible rebel attacks, Turkey has beefed up security for a major oil pipeline carrying Caspian crude from the Azeri capital Baku via Georgia to the Turkish Mediterranean port of Ceyhan, a senior energy ministry source told Reuters.

In comments implying military action might be averted, Iraqi Vice-President Tareq al-Hashemi said in Ankara on Wednesday he had achieved his aims in emergency talks with Turkish leaders.

"I think I got what I wanted (from my talks). Now there is a new atmosphere and we should use it... Iraq should be given a chance to prevent the cross-border terrorist activities," CNN Turk television quoted Hashemi as saying.

Iraqi Prime Minister Nuri al-Maliki telephoned Erdogan to reiterate his commitment to stopping Kurdish rebels from using Iraq as a launchpad for attacks, state television said.

NATO Secretary General Jaap de Hoop Scheffer also urged restraint in a telephone call to Turkish President Abdullah Gul.

"He (Scheffer) expressed his view that all parties should exercise the greatest possible restraint, particularly in this time of great tension," NATO spokesman James Appathurai told a news briefing in Brussels on Wednesday.

Syrian President Bashar al-Assad said during an official visit to Ankara he backed Turkey's fight against terrorism.

BAGHDAD TEAM

The Baghdad government said it would send a high-level political and security delegation to Turkey to assure Ankara it was committed to tackling Kurdish rebels.

Turkey's parliament is expected to approve the request from Erdogan's cabinet by a large majority after an open debate due to start at 1200 GMT.

Parliamentary approval would create the legal basis for military action. By law, Turkey's parliament must approve the deployment of Turkish troops abroad.

"Passage of this motion does not mean an immediate incursion will follow, but we will act at the right time and under the right conditions," Erdogan said on Tuesday.

Erdogan is under pressure from public opinion, opposition parties and the influential military to hit PKK camps in Iraq after a series of deadly rebel attacks on Turkish troops.

U.N. Secretary-General Ban Ki-moon, asked about possible Turkish action in Iraq, made a veiled appeal for restraint.

"We are going through a very difficult and sensitive period in Iraq. We need full cooperation and support from the countries in the region," he told reporters in New York, noting Turkey will host an international conference on Iraq in early November.

Washington and Baghdad have so far failed to take action against the estimated 3,000 PKK guerrillas hiding in northern Iraq, despite repeated Turkish appeals over a number of years.

Ankara knows Baghdad has little clout in Iraq's autonomous Kurdish north, whose leaders have consistently refused to take up arms against their ethnic kin in the PKK. Washington's own forces are stretched in central Iraq.

Ankara blames the PKK, considered a terrorist organization by the United States and the European Union, for the deaths of more than 30,000 people since the group launched its armed struggle for an ethnic homeland in southeast Turkey in 1984.

Turkey conducted large military operations in northern Iraq against the PKK in the 1990s but failed to wipe out the rebels.

Some analysts say that despite its tough rhetoric Turkey may limit itself to aerial bombardment of rebel targets and small forays across the border while avoiding a major incursion.

(Additional reporting by Orhan Coskun, Selcuk Gokoluk and Evren Mesci in Ankara, Mark John in Brussels and Baghdad bureau)

Iraq