Oct. 21 (Bloomberg) -- Turkey's army and Kurdish militants clashed near the border with Iraq in fighting that killed 44 people as Turkey considered an attack on the group's bases in northern Iraq.

Thirty-two members of the Kurdistan Workers' Party, or PKK, who had crossed into Turkey from Iraq, and 12 Turkish soldiers, died in the fighting, the Turkish armed forces said on its Web site. The battles took place near the Turkish village of Daglica, about 5 kilometers (3 miles) north of the Iraqi border. Sixteen soldiers were also injured.

The incident will ``ratchet up the pressure'' on Prime Minister Recep Tayyip Erdogan to make a military incursion into northern Iraq, said William Hale, author of ``Turkish Foreign Policy,'' in a phone interview from Istanbul. The price of crude oil futures rose to a record above $90 a barrel last week on concern an attack would disrupt oil exports from Iraq.

``As a nation we are extremely angry,'' Erdogan said today in televised comments in Istanbul. ``We will do whatever is necessary within the scope of the power now vested in us by parliament.''

Erdogan last week obtained permission from parliament to order a military incursion into Iraq's north, after the PKK killed 28 Turkish soldiers and civilians earlier this month.

Istanbul Protests

About 3,500 PKK fighters use northern Iraq as a base to attack targets in Turkey, according to the Turkish government. The PKK, which wants an independent Kurdish state, is recognized as a terrorist organization by the U.S. and the European Union.

In Istanbul today, hundreds of people gathered in the city's central Taksim square urged the government to launch an assault on the PKK in Iraq. ``Send the troops in,'' members of the crowd chanted. ``The U.S. is the killer of our soldiers,'' they said. Demonstrators briefly blocked traffic over the Bosphorus bridge, the main road link between the Asian and European sides of Istanbul, eyewitnesses said.

The PKK captured a group of Turkish soldiers during today's fighting, the Netherlands-based Firat news agency reported on its Web site. The PKK uses the news service to distribute its statements. Eight soldiers are missing in action, Turkey's NTV news channel said, citing unidentified security officials.

Talabani's Rejection

Erdogan was scheduled to meet later today with President Abdullah Gul and army chief General Yasar Buyukanit to decide on Turkey's response to the day's events. Gul, in televised comments, said he will meet tomorrow with the leaders of the political parties in the Turkish parliament.

The alternative to an incursion ``is to try and arrange with the Americans for the expulsion from Iraq of the PKK's leaders and the dispersion of the group's camps,'' said Hale.

Iraqi President Jalal Talabani rejected a demand made by Erdogan yesterday to seize and extradite the PKK's leadership in Iraq as ``a dream that will never be realized,'' according to Agence France-Presse.

Turkey has the second-largest standing army in the North Atlantic Treaty Organization after the U.S.

The Turkish government says U.S.-led coalition forces have failed to crack down on PKK fighters holed up in the oil-rich region.

Ali al-Dabbagh, an Iraqi government spokesman, said today that any action should be taken in coordination with Iraq.

``One more crossing the border won't solve the problem,'' Dabbagh said on CNN's ``Late Edition'' program. ``It will be great problems for all of us. We are urging Turkey not to take such a step.''

`Great Problems'

While the U.S. has warned Turkey to stay out of northern Iraq, a relatively peaceful area of the country, Turkey says the U.S. should treat the PKK like Osama bin Laden's al-Qaeda terrorist network and attack the group's bases. Almost 40,000 people have died in clashes between the autonomy-seeking PKK and the Turkish military over the past two decades.

Washington is ``committed to working with Turkey and Turkish authorities to eliminate the PKK terrorist threat,'' U.S. Ambassador to Turkey Ross Wilson said in an e-mailed statement condemning today's killings. ``Ending this cycle of violence is a goal that unites us.''

Wilson didn't say what measures the U.S. government might take with Turkey against the PKK. The U.S. has ruled out attacking the PKK's camps, and has instead sought to work with Turkey and Iraq to resolve the issue by non-violent means such as cutting off the group's source of financing.

Oil prices in New York rose to a record above $90 a barrel last week partly on concern that a Turkish raid into Iraq would disrupt shipments from northern Iraq's oil fields to Turkey's Mediterranean coast and hurt regional stability.

To contact the reporters on this story: Mark Bentley in Ankara at mbentley3@bloomberg.net;

Last Updated: October 21, 2007 13:43 EDT