Hezbollah steps up Syria battle, Israel threatens more strikes AMMAN (Reuters) - Lebanese Hezbollah militants attacked a Syrian rebel-held town alongside Syrian troops on Sunday and Israel threatened more attacks on Syria to rein the militia in, highlighting the risks of a wider regional conflict if planned peace talks fail. Activists said it was the fiercest fighting in Syria's two year-old civil war involving Hezbollah, a Shi'ite group backed by Iran which they said appeared to be helping President Bashar al-Assad secure a vital corridor in case Syria fragments. Speaking from Qusair near the border with Lebanon's Bekaa Valley, activist Hadi Abdallah said Syrian warplanes bombed the town in the morning and shells were hitting the town at a rate of up to 50 a minute. At least 32 people were killed. "The army is hitting Qusair with tanks and artillery from the north and east while Hezbollah is firing mortar rounds and multiple rocket launchers from the south and west," he said. Assad poured scorn on the idea that a U.S.- and Russian-sponsored peace conference planned for Geneva next month would end fighting that is deepening the sectarian fault lines between Sunnis against Shi'ites across the Middle East. That is unrealistic," he told the Argentine newspaper Clarin, in reference to the mainly Sunni groups seeking to unseat him. Assad declared "No dialogue with terrorists," but it was not clear from his remarks whether he would agree to send delegates to a conference that may falter before it starts due to disagreements between its two main sponsors and their allies. The opposition will agree its stance on the proposed peace conference in a meeting due to start in Istanbul on Thursday, during which it will also appoint a new leadership. Israeli Prime Minister Benjamin Netanyahu said his country was "preparing for every scenario" in Syria and held out the prospect of more Israeli strikes inside Syria to stop Hezbollah and other opponents of Israel getting advanced weapons. "We will act to ensure the security interest of Israel's citizens in the future as well," Netanyahu said. Israel has neither confirmed nor denied reports that it attacked Iranian-supplied missiles stored near Damascus this month that it believed were awaiting delivery to Hezbollah, which fought a war with Israel in 2006 and is allied with Assad. Attacks by troops and militias loyal to Assad, who inherited power in Syria from his father in 2000, have put rebel brigades under pressure in several of their strongholds across the majority-Sunni country of 21 million people. In one attempt to strike back, opposition sources said rebel fighters had abducted the father of Deputy Foreign Minister Faisal Mekdad in the province of Deraa, one of many tit-for-tat kidnappings being carried on by both sides. Mekdad's nephew was taken before, and exchanged for Free Syrian Army (rebel) prisoners. The speculation is that a similar deal will be struck for his father," said activist Al-Mutassem Billah of the opposition Sham News Network. In the fighting near Lebanon, rebel fighters clashed with mechanized Syrian army units and Hezbollah guerillas in nine points in and around Qusair, 10 km (six miles) from the border, activists said. The region is needed by Assad, who is from the Alawite sect, an offshoot of Shi'ite Islam, to secure a route from Hezbollah's strongholds in the Bekaa to areas near Syria's Mediterranean coast where many Alawites live, they said. Opposition sources say Syria's coastal region could serve as an Alawite statelet if Assad should lose control of Damascus, a potential fragmentation of Syria along ethnic and sectarian lines that raises the prospect of many more deaths. Sources in Lebanon's Bekaa Valley said shells fired by rebels had hit the edges of the town of Hermel, a Hezbollah stronghold, but no casualties were reported. Syrian Television said troops "leading an operation against terrorists in Qusair" had reached the town centre. Our heroic forces are advancing toward Qusair and are chasing the remnants of the terrorists and have hoisted the Syrian flag on the municipality building. In the next few hours we will give you joyous news," the television said. Abu Imad, another activist in the Qusair region, said the rebel grip was tenuous but the army was far from in control. "If Qusair falls, it will be a big problem because the regime will be in control of most of the countryside south of the city of Homs and the rebel forces holding Old Homs will be squeezed," he said. The United Nations says at least 80,000 people have been killed in the conflict, which started with peaceful protests against four decades of rule by Assad and his late father. Additional reporting by Suleiman al-Khalidi in Amman and Jeffrey Heller in Jerusalem; writing by Khaled Yacoub Oweis and Philippa Fletcher; Editing by Kevin Liffey