REBELS POUND RUSSIAN TROOPS.

Byline: Michael Wines The New York Times

One of the Russian military's first serious forays into Chechnya's besieged capital, Grozny, went disastrously awry late Wednesday after thousands of Chechen rebels surrounded the invading troops and pounded them with rocket-propelled grenades.

Correspondents at the battle scene, a square near central Grozny, said the area was littered with blazing armored vehicles and the bodies of Russian soldiers. A Reuters correspondent, Maria Eismont, said she counted more than 100 Russian dead at the end of the three-hour battle.

Russian Defense Ministry officials had no immediate comment on the reports. Earlier, they had denied claims by Chechen officials that a long-anticipated invasion of Grozny by Russian troops had begun.

But Russian sources told the Interfax news service that their troops had strengthened their grip on Grozny's eastern edge, near the scene of Wednesday's battle, and that reconnaissance missions into the center of the city had begun.

If the Russian losses are as large as reported, it would be the first major setback for the military since the Kremlin started a campaign to retake Chechnya from Islamic rebels in September.

It would also serve as an ominous reminder of the fate that befell Russian troops the last time they tried to take Grozny, at the end of a two-year civil war in 1996. At that time, thousands of ill-prepared soldiers moved into the center of town, only to be cut down or driven out by Chechen guerrillas who had been planning a counterattack for weeks.

Chechen forces have been promising the same sort of Grozny welcome for Russian troops in the latest conflict. But Kremlin military strategists have repeatedly said they are ready this time.

Earlier Wednesday, a senior Russian military official had confidently predicted that the remaining militants would be driven out of Grozny within days, and that all Chechnya would fall under Russian control in a matter of weeks.

The first reports from the scene of Wednesday's battle, in Minutka Square about two miles from central Grozny, were sketchy. But correspondents on the scene said a column of Russian armor had been encircled by rebel forces after moving into the city from the eastern suburb of Khankala, the site of a military airbase that the Russians recently seized.

Except for a report on Moscow's leading news-radio station, Ekho Moskvy, the battle went unreported by Russian news organizations Wednesday evening. Russian defense officials insisted on Wednesday that Grozny was not being bombarded and that the city was the scene only of sporadic clashes with rebel bands, even as journalists there reported constant shelling and rebels claimed heavy fighting in five separate districts.

The battle was precisely the sort of engagement that Russian strategists have been trying to avoid successfully, until now as they try to retake Chechnya after three years of de facto independence from Moscow.

Since the Kremlin ordered a counterattack this fall against Islamic rebels who had moved from Chechnya into neighboring Dagestan, perhaps 100,000 Russian troops have managed to occupy 60 percent of Chechnya.

By Moscow's count, only 400 troops had died in fighting before Wednesday's battle. Russian forces have kept their losses low by relying on relentless air and artillery attacks to drive rebels and civilians alike from targeted towns and villages before they are occupied.

The strategy essentially a repeat of the NATO campaign against Yugoslavia last spring, but lacking the West's precision weapons has killed hundreds, if not thousands, of civilians and provoked international criticism from governments and human-rights organizations.

In a 45-minute phone conversation Wednesday, the head of the European Union, Prime Minister Paavo Liponnen of Finland, warned Prime Minister Vladimir Putin of Russia that the European confederation would review its relations with Russia if the war did not halt and negotiations toward a political solution did not pick up steam.

The Kremlin has insisted it is putting down an internal rebellion by terrorists and bandits. And while they have made some moves to mollify critics, such as opening an escape corridor out of Grozny for civilians and establishing refugee camps, Russian leaders have also made it clear that neither their tactics nor their goal of eliminating rebel activity in Chechnya would be changed.

Nor have they been under any domestic pressure to change, because the strategy has, until now, worked almost perfectly.

With his rebellious province increasingly devastated by bombs and occupied by government troops, Chechnya's elected president, Aslan Maskhadov, all but pleaded for peace negotiations.

``I do not reject any proposals about political dialogue if they could hasten a peaceful outcome to this crisis by even an hour,'' he said in a videotaped address, reportedly made at a hideout in Grozny.

Maskhadov attached only one condition: that the talks be overseen by an international mediator to assure Moscow's good faith.

But Putin and Russian military officials rejected that condition immediately. And the Kremlin's emergencies minister, Sergei Shoigu, said he would meet with Maskhadov only to negotiate the safe passage of civilians out of Grozny so that Russian troops could complete their occupation of the city.

A representative of the Organization for Security and Cooperation in Europe, Foreign Minister Knut Vollebaek of Norway, was in nearby North Ossetia on Wednesday. He said he planned to visit Russian-occupied areas of Chechnya today and was ready to join a search for a political solution to the conflict.

In Moscow, the deputy chief of the general staff, Gen. Valery Manilov, told a gathering of foreign military attaches that Russian troops would control all of Chechnya within three months.

Talks with rebels are pointless, he said.

``The question of Grozny's liberation should take a matter of days,'' he was quoted as saying. ``No massive strikes, no storms, no assaults will take place in Grozny. We will not resort to these tactics as long as there is a single civilian in Grozny.''

He said more than 7,000 rebels have died in combat so far, and that up to 15,000 rebels, including 1,500 mercenaries, remain in the province. Rebel spokesmen say just 150 of their forces have been killed.