Feb. 23 (Bloomberg) -- Turkish forces killed as many as 79 Kurdish militants and lost seven soldiers of their own in the first two days of their largest incursion into Iraq in 11 years, the armed forces said today.

Today's fighting killed 35 Kurdish militants and two Turkish soldiers, Turkey's military in Ankara said on its Web site. Turkey used artillery and helicopter gunships against the Kurdistan Workers' Party, or PKK, the Web site said. Ammunition depots, anti-aircraft weapons and gun positions were destroyed, it said. Shelters and caves were made unusable.

The U.S., the United Nations and Germany have called on Turkey to show restraint after troops pushed over the border into northern Iraq late on Feb. 21. Iraq's Kurdish-controlled northern region has remained relatively peaceful since the U.S.-led invasion five years ago.

``The target of the military operation is the PKK terrorist organization,'' Foreign Minister Ali Babacan said in Ankara today in televised comments. ``Turkey is a staunch defender of Iraq's territorial integrity and political unity.''

The Web site didn't say how long the military action would last. ``As of 5 p.m. today, fighting is continuing with groups of terrorists in four separate regions,'' it said.

Turkey has fought the PKK, which seeks political autonomy for Kurds in Turkey's southeast, for two decades at the cost of almost 40,000 lives. The group, which is designated a terrorist organization by the U.S. and European Union, withdrew some of its forces to Iraq in 1999 after Turkey captured its leader, Abdullah Ocalan, and put him on trial.

`Heavy Losses'

The PKK has suffered ``heavy losses from long-range weapons fire and air strikes,'' the military said. Fighting was still taking place in some areas as militants attempted to escape south away from the border in a ``panicked state,'' it said.

Turkey's privately owned NTV television channel yesterday said as many 10,000 troops are involved in the incursion. CNN Turk, by contrast, said 3,000 special forces are taking part. The military hasn't provided a figure.

The mission is focused more on breaking the PKK psychologically than dealing a killer blow to the organization, said Hasan Koni, a professor of international relations at Istanbul's Bahcesehir University and a former lecturer at an academy for top army officers.

``The operation will probably last three or four more days,'' Koni said in a telephone interview. ``The aim is more psychological than military, to destroy the PKK's camps. Their bases are high in the mountains and, because of the extreme cold, many of the militants are probably hiding down in Iraqi Kurdish villages kilometers away.''

`Utmost Restraint'

United Nations Secretary-General Ban Ki-moon called on Turkey to exercise ``utmost restraint'' in its battle with the PKK in Iraq. The government should ``respect the international borders between Iraq and Turkey,'' he said in a statement posted on the UN's Web site late yesterday.

The cross-border operation may last as long as two weeks, CNN Turk said, citing unidentified security officials.

``We will withdraw our troops once the mission is complete and within the shortest possible time,'' Prime Minister Recep Tayyip Erdogan told reporters yesterday, adding that he informed President George W. Bush about the incursion Feb. 21.

He didn't give the objectives of the mission, other than destroying the PKK's camps.

The Turkish military struck more than 200 PKK targets, including bases and training camps, during bombing raids on Dec. 16 and Dec. 22. The PKK has bases in Iraq in a region stretching about 400 kilometers (250 miles) along Turkey's border with Syria southeastwards toward Iraq's border with Iran.

U.S. Intelligence

The U.S. has provided the Turkish military with intelligence to track down about 4,000 PKK fighters in northern Iraq, Bush said after meeting Erdogan on Nov. 6. Turkey is the only Muslim member of the North Atlantic Treaty Organization and provides troops for peacekeeping in Afghanistan.

Britain urged Turkey yesterday to withdraw as quickly as possible, while Germany said it viewed the incursion with ``great concern.'' Iraqi Prime Minister Nuri al-Maliki tried to talk Turkey out of an attack against the PKK.

``We urged the Turkish government to limit their operations to precise targeting of the PKK, to limit the scope and duration of their operations,'' White House spokesman Scott Stanzel told reporters yesterday, adding that the PKK was an enemy of both Turkey and the U.S.

Oil Reserves

The Kurdish region of Iraq may hold oil reserves of as much as 20 billion barrels, and crude oil for April delivery rose 58 cents, or 0.6 percent, to settle at $98.81 a barrel yesterday on the New York Mercantile Exchange. The April contract rose 3.5 percent this week. Prices are up 62 percent from a year ago.

The Kurdish regional administration governing Iraq's north blamed the U.S. for allowing Turkey to mount the military offensive, Agence France-Presse reported today.

``We place responsibility for the military operations on the U.S. government because without its consent, Turkey would not be allowed to violate the land and air sovereignty of Iraq,'' regional government spokesman Falah Mustafa said, according to AFP.

Iraqi President Jalal Talabani and other leading Iraqi Kurds have allied themselves with the U.S. in the fight against an insurgency by Islamist militants, providing troops belonging to the Kurdish Peshmerga army that polices northern Iraq.

To contact the reporter on this story: Steve Bryant in Ankara at Sbryant5@bloomberg.net; Mark Bentley in Ankara at mbentley3@bloomberg.net

Last Updated: February 23, 2008 12:19 EST