Congo rebels seize strategic eastern town GOMA, Democratic Republic of Congo (Reuters) - Rebels in eastern Democratic Republic of Congo seized a second town from fleeing government forces on Sunday, witnesses and a rebel spokesman said, a further embarrassment for the U.N.-backed army after the insurgents took a mineral transit town. The capture of the town of Rutshuru on Sunday opens the way for a possible rebel advance on Goma, the provincial capital about 70 km (43 miles) to the south. On Friday, the rebels seized Bunagana, an important mineral transit town, driving about 600 Congolese soldiers across the border into Uganda. The gains for the M23 rebel movement in volatile, mineral-rich North Kivu province risks dragging the vast, loosely governed central African state back into war. They could also damage fragile relations with neighboring Rwanda, which has repeatedly denied allegations that the rebels are receiving support from Kigali military officials. The M23 insurgents, mostly Congolese Tutsis, many of them army mutineers, take their name from a March 2009 peace deal that ended a previous rebellion in North Kivu, but which the rebels say has been broken. Like the larger eastern rebellion from 2004 to 2009, the current mutiny has its roots in ethnic and political wounds dating back to Rwanda's 1994 genocide. Later invasions of Congo by Rwandan forces and Kigali's backing of Congolese rebels fuelled two successive wars that killed several million people. "We took control of the town of Rutshuru before noon and sent the (Congolese army) fleeing," Colonel Vianney Kazarama of the M23 rebel movement told Reuters by telephone on Sunday. A German newspaper reporter and a local resident said they saw rebel fighters enter the town unopposed. I'm in Rutshuru. The FARDC (Congolese army) left this morning. M23 just took over, but there was no fighting," Simone Schlindwein, Great Lakes correspondent for Tageszeitung newspaper, said. Rutshuru resident Lucien Amoli said he saw between 200 and 300 rebel soldiers occupying the town center in the early afternoon. "The loyalist soldiers were shooting in the air when they left and the rebels were also shooting in the air when they entered the town," he said. That went on for about 30 minutes, now everything is calm but we don't know for how long. Congolese military and government officials were not immediately available to comment. The United Nations peacekeeping mission in Congo, MONUSCO, told Reuters that U.N. helicopter gunships bombarded rebel positions on Sunday. We've sent our attack helicopters to Rubare and Runyoni. We have already hit them there," spokesman Alex Essome said. Another U.N. source said that besides Rutshuru and Rubare, another location, Ntamugenga, had also fallen to the M23 rebels, who had halted for the moment. The source, who asked not to be named, said U.N. peacekeepers were holding small operating bases at Kiwanja and Katale near Rutshuru and MONUSCO was looking to use its reserves, including special forces, to ensure the protection of Goma to the south. Speaking to Reuters TV at a base near Bunagana close to the Ugandan border, M23 commander Colonel Sultani Makenga said Congolese President Joseph Kabila's government held the key to resolving the conflict. If they want us to talk, we shall talk. If they want us to fight, we shall fight on. Every Congolese wants a solution to this problem, they are with us so we shall fight until the government sees the need to negotiate," Makenga said, guarded by fighters carrying machine guns and ammunition belts. Kinshasa has yet to respond to the latest rebel successes. In a memo seen by Reuters on Sunday, the defence ministry called for renewed operations to arrest senior M23 figures including Makenga and General Bosco Ntaganda, who is wanted by the International Criminal Court for alleged war crimes. Jason Stearns, an independent Congo analyst and author, said the rebel advance "represents a big blow to the Congolese army and the United Nations peacekeeping mission." "It will strengthen the M23's hand in negotiations, if those happen any time soon," he said. The U.N. Security Council on Friday condemned attacks by M23 fighters on peacekeepers in the area after an Indian soldier was killed in the attack on Bunagana. The rebels had taken Rutshuru before, in 2008, when they were known as the CNDP. They were accused then by rights groups of massacring around 150 people in the adjoining town of Kiwanja. Rutshuru's capture in 2008 paved the way for an advance on Goma that eventually forced the government in Kinshasa to negotiate a deal that saw the eastern rebels integrated into the national army. They abandoned the army's ranks earlier this year, saying the government had not respected the agreement. A report by U.N. investigators last month provided the strongest evidence yet that officials in the Rwandan government were providing military and logistical support to armed groups in Congo. Kigali strongly denies backing the rebels. Reporting by Justin Dralaze, Joe Bavier, Bate Felix; Editing by Pascal Fletcher and Robin Pomeroy