Turkish helicopters and fighter jets pounded Kurdish rebel positions on Friday as diplomatic efforts began in Ankara to avert a major offensive against the guerrillas based in northern Iraq.

Turkey described as unsatisfactory a series of proposals offered by a high-level Iraqi delegation to Ankara to prevent a major military operation against Kurdish rebels in Iraq, a senior Turkish diplomat said, and demanded that Baghdad hand over all separatist rebels in the country.

"Everyone (PKK members in northern Iraq) there is guilty. They are criminals at least for being a member of a terrorist organization," Deputy Prime Minister Cemil Cicek said. "We want all of them to be handed over," he said, adding that Ankara had given Iraq a list of PKK militants.

Cicek was speaking in a televised interview as Iraqi and U.S. officials met Turkish officials in Ankara in a bid to stop Turkey launching an incursion into northern Iraq.

Turkey has massed up to 100,000 troops along the frontier before a possible cross-border operation to crush about 3,000 guerrillas of the outlawed separatist Kurdistan Workers Party (PKK) who launch deadly attacks into Turkey from northern Iraq.

State-run Anatolian news agency said Turkish helicopters fired on PKK shelters discovered after reconnaissance missions along the mountainous border and inside Turkey, which has NATO's second biggest army.

Prime Minister Tayyip Erdogan has repeatedly said Turkey would not tolerate any more PKK attacks from Iraq and has called for immediate concrete steps to be taken by U.S. and Iraqi authorities to avert a military operation.

Security sources said 10 Sikorsky helicopters, carrying troops and equipment, took off from Yusekova town in Hakkari province and headed for Daglica region near the Iraq border.

"We are moving more troops from other provinces to Sirnak province," a military source, who declined to be named, told Reuters in southeast Turkey. Turkey's military has boosted troop levels mainly in Hakkari and Sirnak provinces bordering Iraq.

The PKK took up arms against Turkey in 1984 with the aim of creating an ethnic homeland in the southeast. More than 30,000 people have been killed in the conflict.

Turkey's lira rose 0.6 percent against the dollar and shares gained 1.4 percent, boosted by diplomatic efforts in Ankara.

ANKARA TALKS

Iraqi Defense Minister General Abdel Qader Jassim and National Security Minister Shirwan al Waeli held talks with Turkish Foreign Minister Ali Babacan and Interior Minister Besir Atalay on Friday.

The talks come ahead of Secretary of State Condoleezza Rice's visit to Ankara on November 2 to discuss the crisis and before a regional conference in Istanbul on November 2-3, where foreign ministers will discuss Iraq.

Public pressure on Turkish authorities to act has grown since rebels killed some 40 soldiers over the last month. The PKK, branded a terrorist organization by the United States and the European Union as well as Turkey, has said it captured eight soldiers.

But Turkish diplomats say a decision on potentially launching a major operation will not be made until Erdogan meets with President George W. Bush in Washington on November 5.

Jassim told reporters on arrival on Thursday that his delegation, which includes officials from the U.S. military as well as the northern Iraqi Kurdish administration, had come with concrete proposals. He declined to give further details.

"For the Iraqis, those proposals may be concrete and strong, but for us some of the proposals may be weak because our perspective differs, so we are now having internal consultations," a Turkish official told Reuters, adding that these talks were parallel to bilateral talks.

An Iraqi Defense Ministry spokesman told reporters in Ankara "everything is on course" at the talks which he described as "positive". He said there was agreement on some matters and more clarity was expected after another meeting later on Friday.

Turkey wants U.S. and Iraqi authorities to hand over PKK leaders based in northern Iraq, including Murat Karayilan and Cemil Bayik, and have their numerous camps shut.

But the central government has little clout in the mainly Kurdish autonomous north of Iraq and U.S. troops are largely absent from the area.

Iraqi Kurdish leader Masoud Barzani has infuriated Turkey by refusing to act against the PKK. He has said his peshmerga fighters will resist any Turkish incursion.

(Additional reporting by Thomas Grove in Habur, Daren Butler and Paul de Bendern in Istanbul)

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