Two days of fighting in a town in Russia's troubled Caucasus region left 12 suspected rebels and seven policemen dead, officials said Friday, in the latest spate of violence in the area.

Police said they were acting on a tip when they hunted down the group in Tukui-Mekteb, a village in the southern Stavropol region, about 25 miles north of the border with Chechnya. The RIA-Novosti news agency reported the group had probably been planning to seize a school.

The suspected militants refused to surrender and 700 police troops on Friday surrounded two houses where the remaining rebels were holed up, the regional Interior Ministry said.

Seven policemen were killed over the two-day clash and 12 militants died, Interior Ministry spokesman Roman Shchekotin said.

Russian TV channels showed troops approaching the village under cover of armored personnel carriers, and soldiers lying on the snowy ground, training their guns on the houses where the militants were hiding.

"The (police) sweep began from the park," Ramazan Khaladayev, a local resident, told Rossiya state television. "They searched me, then my neighbor, and moved on that way, where the firing started later."

The dead suspects were alleged mercenaries for a radical Islamic group based in Chechnya, the Interior Ministry said. They were suspected of a series of attacks there, and of planning similar attacks against law enforcement authorities and strategic facilities in the Stavropol region.

They probably had planned to seize a school, RIA-Novosti reported, citing Viktor Barnash, the head of the Stavropol organized crime department.

Russian troops poured into Chechnya in 1994, then again in 1999 to put down an insurgency that started as a fight for independence but has increasingly been tied with radical Islamic ideals. While large-scale fighting has ended, smaller skirmishes continue unabated and in recent years, the conflict has spilled over into other parts of the North Caucasus region.