EDS NOTE GRAPHIC CONTENT - A man in military fatigues lies dead next a truck on a road after a gunbattle between rival drug gangs near the town of Ruiz, in the Pacific coast state of Nayarit, Mexico,... (Associated Press) 
 
 A gunbattle between rival drug gangs in western Mexico left 29 bodies in fake military uniforms heaped across a roadway and inside bullet-riddled vehicles in the Pacific coast state of Nayarit, the army said Thursday. 
 
 The bodies, all male, were found Wednesday scattered around 14 shot-up pickup trucks and sport utility vehicles, two of which had bulletproofing. 
 
 Television images of the scene near the town of Ruiz showed what appeared to have been a convoy of cartel vehicles that was ambushed or engaged by another column of gunmen on a stretch of rural highway. Military-style boots, bulletproof vests, hand grenades and thousands of rounds of ammunition were found at the scene. 
 
 Federal and state officials gave conflicting reports on the incident. 
 
 Nayarit state police said officers responding to reports of a kidnapping found four wounded men at the scene of the shootout. One injured person died later, and three remain at the hospital, Nayarit officials said. 
 
 The army said two suspects wounded in the battle were found at the scene. It was unclear if the two reported by the army were included in, or additional to, the state figure. 
 
 The army said in a statement that around the same time Wednesday, soldiers engaged in a shootout with armed suspects in a town about 35 miles (60 kilometers) north of Ruiz. Two suspects _ a man and a woman _ were killed in that confrontation. The military statement did not say whether the two shootouts were related. 
 
 Nayarit's attorney general Oscar Herrera told a radio station that preliminary reports indicated the two gangs involved in the fierce highway battle were the Sinaloa and the Zetas drug cartels. He said one of the two cartels kidnapped a man of the rival gang, which resulted in a car chase and subsequent gunfight. 
 
 Nayarit and the nearby states of Michoacan and Zacatecas have become battlegrounds for drug cartels fighting for control of the area. 
 
 The Sinaloa cartel, Mexico's most powerful, has long been active in Nayarit, which borders its home base in Sinaloa state, but the gang has recently been challenged by the Zetas and by remnants of the Beltran Leyva cartel. 
 
 In nearby Michoacan state, officials said 500 marines and soldiers have been deployed to an area where at least 1,200 villagers fled their homes during three days of clashes between rival drug traffickers, which appeared to be unrelated to the Nayarit conflict. The government gave the families refuge at five shelters in two nearby towns. 
 
 The arrival of security forces Wednesday appeared to have soothed fears and hundreds of villagers decided to go back home by Thursday. Officials said only 300 people remained at the five shelters Thursday evening. 
 
 It is at least the second time a large number of rural residents have been displaced by drug violence in Mexico. In November, about 400 people in the northern border town of Ciudad Mier took refuge in the neighboring city of Ciudad Aleman following cartel gunbattles. That shelter has since been closed and most have returned to their homes. 
 
 Michoacan state Civil Defense Director Carlos Mandujano said the villagers were put up at a church, recreation center, event hall and schools in the towns of Buenavista Tomatlan and Apatzingan. 
 
 Mandujano said state authorities provided sleeping mats, blankets and food for those in the shelter. 
 
 Residents had reported after fleeing that gunbattles between rival drug cartel factions had made it too dangerous for them to stay in outlying hamlets. The latest reports said arsonists were burning avocado farms in the nearby town of Acahuato. 
 
 "We woke up with fear (on Monday), but things appeared to have quieted down. It wasn't until later that morning that we saw SUVs with armed men driving by very fast and shooting at each other," said a woman who did not want to be named for security reasons. 
 
 Several displaced people said they would stay at the shelters all week before considering going back to their villages. 
 
 "I am not scared, but my children are," said a mother, who asked not to be quoted by name because of fear of retaliation. 
 
 The fighting in Michoacan is believed to involve rival factions of the Michoacan-based La Familia drug cartel, some of whose members now call themselves "The Knights Templar." 
 
 Mexico still has fewer people displaced by violence than countries like Colombia, according to the Norway-based Internal Displacement Monitoring Centre, which tracks such figures. It estimates about 230,000 people in Mexico have been driven from their homes, often to stay with relatives or in the United States. An estimated 3.6 million to 5.2 million people have been displaced by decades of drug- and guerrilla-war violence in Colombia. 
 
 Buenavista police chief Othoniel Montes Herrera said he has neither the manpower nor the armament to patrol rural areas frequented by drug gangs. Sending ill-armed officers out there "would be certain death, and we're not thinking of putting our personnel at that risk." 
 
 Drug violence has been on the rise in Nayarit, a Pacific Coast state known for its surfing and beach towns. In October, gunmen killed 15 people at a car wash in the capital of Tepic, an attack that police said bore the characteristics of organized crime. The bodies of 12 murder victims, eight of them partially burned, were found on a Nayarit dirt road a year ago. Officials have not identified the gangs fighting there. 
 
 And in Durango state, which borders Nayarit to the north, authorities have been excavating dozens of corpses from mass burial grounds used by drug cartel killers. 
 
 On Thursday, state police reported that two more bodies had been found in the latest excavation, bringing the total of bodies found at a seven lots in the state capital to 223. 
 
 ___ 
 
 Associated Press writer Adriana Gomez Licon in Mexico City contributed to this report. ||||| MEXICO CITY—Three days of raging gun battles this week between rival drug gangs in Michoacán state killed an unknown number of people, forced hundreds to flee their homes and raised fresh fears that another major Mexican state has become all but ungovernable. 
 
 Fighting broke out Monday and lasted for three days. But news of the conflict was slow to get out because local media in states like Michoacán have largely stopped covering the carnage on orders from drug gangs. 
 
 View Full Image European Pressphoto Agency A handout photograph made available by Quadratin shows several vehicles after been set on fire during fighting between Mexican armed groups in Tierra Caliente, Michoacán. Hundreds have fled their homes looking for a safer place. 
 
 On Tuesday, a helicopter belonging to the Federal Police was forced to make a hard landing after being shot at by gunmen from a drug cartel, the Federal Investigative Agency, an arm of the Attorney General's Office, said Tuesday. Three federal police were injured. 
 
 The police didn't immediately have a number of casualties in the fighting between the gangs. But the lawlessness echoed the scene in Tamaulipas state, where mass graves have recently been found. In another western Mexican state, Nayarit, a gunbattle this week left 28 dead. 
 
 "Organized crime groups are fighting for control of the area," said Genaro Guizar, the mayor of Apatzingán, the fourth-largest city in Michoacán. "There was panic throughout the place." 
 
 Mr. Guizar said that a total of about 800 people had taken refuge in shelters in the nearby town of Buenavista and in Apazingan, but that the refugees had started to return to their homes Wednesday after fighting eased. 
 
 Michoacán, a large agricultural state known also for its tourist attractions like the colonial state capital of Morelia, is the home turf of the powerful La Familia drug cartel, which specializes in making and trafficking methamphetamines, using the port of Lázaro Cárdenas to smuggle in precursor chemicals. 
 
 The cartel has infiltrated local police forces and city halls throughout the state, experts say, and largely displaced local governments in many areas. 
 
 The situation is so bad that Mexico's three main political parties on Wednesday signed a joint statement saying they were exploring the possibility of fielding a single, unity candidate in November's gubernatorial race in an attempt to set aside partisan bickering and save the state. 
 
 "It's indicative of how badly the wheels are falling off," said James McDonald, an anthropology professor at Southern Utah University who lived for many years in Michoacán and is an expert on it. "I think Michoacán is lost, like Tamaulipas. And it could be the realization that they need to get together on this and deal with it, or else." 
 
 The uptick in violence in Michoacán this week could be related to December's killing of La Familia chief Nazario Moreno, the messianic leader of the cartel who was known as "El Mas Loco," or "The Craziest One." 
 
 But in March, dozens of banners pinned up across the state announced the creation of a new local cartel, dubbed "The Knights Templar." 
 
 More Mexican Drug War Spills to Neighbor 
 
 The Templars are thought to be remnants of La Familia that have regrouped. Mexican police officials believe the Templars are led by a former teacher, Servando Gomez, nicknamed "La Tuta." They believe another surviving La Familia leader, José de Jesus Mendez, known as "El Chango", or the monkey, may be fighting with Mr. Gomez for control of the organization. 
 
 A Mexican police report said that La Familia had retreated to the countryside after the arrest of 13 mayors and other officials on drug corruption charges in 2009, but had regained much of their former positions in the state's towns and cities after prosecutors failed to win prosecution against the detained officials, who were released. 
 
 Drug-related corruption in Michoacán is rampant, analysts say. The current governor's half-brother and former federal congressman Julio Cesar Godoy was accused of being on the La Familia payroll by Mexican federal officials last year. The congressman was impeached and went on the run. He remains a fugitive. 
 
 Raul Benitez, a security analyst at the Autonomous University of Mexico said the federal government is determined not to lose control of Michoacán in part because of its strategic location between Mexico and Guadalajara, the country's two largest cities. "Michoacán is a big problem," said Mr. Benitez, who fears the violence that plagues the state could contaminate the capital and Guadalajara. 
 
 Unlike Mexico's other cartels, La Familia and the Templars have a messianic creed and strive to gain popular support among the local population. This worries Mexican officials who see the drug traffickers taking on some of the characteristics of guerrilla fighters, said Mr. Benitez. 
 
 Indeed, Michoacán is a prime example of why some military analysts and government officials in the U.S. worry Mexico's drugs war could take on the characteristics of an insurgency, where drug gangs try to displace Mexico's government. 
 
 Last year, Secretary of State Hillary Clinton said the violence in Mexico was starting to resemble a "narco-insurgency," but her comments were batted down by President Barack Obama days later. 
 
 Some academics think the comparison is not a stretch—at least in places like Michoacán, a state of 4.3 million. "La Familia is the de facto go-to governance system in communities that are largely abandoned by the state. If you need anything, from medicine to loans, they are the ones people turn to," said Mr. McDonald. 
 
 Write to David Luhnow at david.luhnow@wsj.com
– Yet another bloody battle in Mexico's drug war has left at least 29 bodies in fake military uniforms lying dead among more than a dozen bullet-riddled vehicles in the Pacific coast state of Nayarit. Investigators believe the highway battle between members of the Zetas and Sinaloa cartels began when gunmen ambushed a convoy of gang vehicles, AP reports. In the nearby state of Michoacan, up to 2,000 people were forced to flee their homes this week by days of fierce fighting between cartel factions, the BBC reports. Officials say the refugees have begun to return their homes after spending several nights in shelters. The conflict between rival factions of the La Familia cartel began Monday but news of the fighting was slow to leak out because local media, on the orders of drug cartels, have largely ceased to cover drug violence, the Wall Street Journal notes.