Battle Rages in Salvador Capital : Central America: A state of siege and curfew are declared as leftist rebels continue a major offensive. Casualties are in the hundreds.

President Alfredo Cristiani declared a state of siege Sunday after leftist guerrillas and army troops battled in the capital on the second day of a guerrilla offensive that has left hundreds of dead and wounded.

Cristiani also announced a dawn-to-dusk curfew for the first time since 1981, when Farabundo Marti National Liberation Front guerrillas launched a nationwide “final offensive” that was supposed to win the war for them.

The weekend fighting between army troops and an estimated 1,000 guerrillas was the worst in El Salvador’s capital in 10 years of civil war.

There were conflicting casualty reports. An army bulletin said that 127 people died, including soldiers, guerrillas and civilians, and that 155 were wounded. The rebels claimed they caused 400 casualties among the military but did not distinguish between dead and wounded. Hospital and forensic sources reported 197 wounded and 53 dead.

The beds and hallways of the public Rosales hospital were full of victims.

U.S. Embassy officials confirmed that an American teacher was among the dead. His name was not immediately released. However, the Baltimore Sun newspaper identified him as Chris Babcock, an English teacher in his mid-20s from Washington state.

The rebels occupied positions at the National University and in a number of neighborhoods. Fighting was also reported at military posts on the outskirts of San Salvador and in the cities of San Miguel and Usulutan.

On Sunday, Comalapa International Airport was closed and the government had taken control of all radio and television broadcasts.

Sunday night, several armored personnel carriers were seen moving through the capital. In the northern Zacamil neighborhood, a witness saw tanks fire on a government housing complex and ram through a barricade of cars that the rebels had set up.

Red Cross officials said they expect the casualty toll to rise because they had not been able to enter some neighborhoods where heavy fighting was going on to retrieve the dead and wounded.

Cristiani appeared twice on a national television hookup Sunday to appeal for public calm and cooperation with the armed forces. He said the government Council of Ministers, meeting in emergency session, had decided to declare the state of siege suspending civil liberties.

The state of siege restricts freedom of expression, transit within the country, rights and assembly and privacy of correspondence.

The curfew will be from 6 p.m. to 6 a.m.

“The government must respond firmly at this time within the law,” Cristiani said.

Meanwhile, on their clandestine Radio Venceremos, the guerrillas announced a nationwide traffic ban beginning at midnight Sunday. They said gas stations must close and that technicians must not repair sabotaged electricity lines. They said they will mine the area around downed power pylons.

The guerrilla offensive apparently is intended to prove the rebel front’s military might in order to strengthen its hand at the negotiating table with the rightist Cristiani government.

The two sides have held two rounds of peace talks since September and were scheduled to hold a third this month in Caracas, Venezuela. However, the rebels suspended the negotiations after a bomb exploded Oct. 31 at the headquarters of the leftist Salvadoran National Workers Federation, killing 10 civilians and wounding 29.

The guerrillas and union members blamed the military for the bombing and say the offensive is partly to avenge the deaths of their labor allies, particularly the union’s leader, Febe Elizabeth Velasquez. They titled the offensive: “Out with the fascists; Febe Elizabeth lives.”

The offensive began Saturday morning with a mortar attack on the National Guard headquarters that wounded three guardsman inside the compound and killed two children nearby.

Saturday night, the guerrillas began a series of coordinated assaults on the 3rd Infantry Brigade in the provincial capital of San Miguel, about 65 miles east of San Salvador, the 6th Infantry Brigade in Usulutan, 50 miles southeast of here, and the 1st Infantry Brigade on the outskirts of the capital.

Residents of Usulutan and San Miguel said they could see damage to the installations, but casualty figures were unavailable.

In San Salvador, the rebels also attacked the National Police training academy, the official presidential residence and the private home of Cristiani, as well as the home of the right-wing president of the National Assembly.

Journalists and other civilians were pinned down in homes and public buildings by mortar and machine-gun fire throughout Saturday night and into Sunday.

The government broadcast Beatles songs, opera and military music on the radio overnight with occasional reports from the military high command. Throughout, scores of irate rightists made on-the-air calls urging the armed forces to deal “a hard fist” to the rebels and “to hang” their political allies, Ruben Zamora and Guillermo Ungo.

Ungo and Zamora returned from exile in 1987 to run legal political parties. In his televised speech, Cristiani indicated they would have to formally break with the rebels or leave.

“We can no longer allow there to be political parties that doubt whether the FMLN (rebels) is trying to restrict the freedom of the Salvadoran people,” Cristiani said.

Ungo and Zamora were in hiding Sunday. Zamora’s house was bombed in October after a guerrilla attack on the Defense Ministry headquarters, and two of his party workers were killed in the town of Sonsonate this month.

Hector Silva, a spokesman for Zamora’s small Popular Social Christian Movement, said in an interview: “They don’t mention the (rebel commanders’) names on the radio. . . . They will try to hit those they can see--us.”

U.S. Embassy officials said no Americans have been intentionally targeted in the offensive.

The guerrillas and troops engaged in heavy fighting around the National University. A diplomatic source said the rebels’ mortar attack on the 1st Infantry Brigade apparently was launched from the university. Late in the day, an army tank was seen entering the campus and smoke rose from inside.

In the Metropolis neighborhood of San Salvador, guerrillas took over a two-story, unfinished apartment building on a hilltop and set up defense positions around it. The 15 rebels inside received journalists waving white flags.

“This is the beginning of the final counteroffensive,” one said. “We won’t go until the government falls or goes to the table to negotiate.”

There were unconfirmed reports that the army later rocketed rebel positions.

Military gunships, observation planes and helicopters periodically flew over the capital. Fighting continued into the night Sunday in the neighborhoods of Mejicanos, Soyapango, Zacamil and El Refugio.

A diplomat said the rebels had about 1,000 fighters in the capital--hundreds brought in from rebel-controlled areas in the north and east of the country.

It was unclear whether they would continue their offensive for another night or try to beat a retreat.

U.S. and military officials had been predicting the offensive for weeks and were on a state of alert. U.S. officials were confined to their homes Saturday afternoon.

The U.S. government has given the Salvadoran government more than $4 billion in military and economic assistance since 1980 to fight the rebels. At least 55 U.S. military advisers are stationed in the country.

U.S. Ambassador William Walker said in an interview: “Obviously, they (the guerrillas) came in fairly large numbers, and obviously, they were trying to show that predictions of their demise were premature. I don’t think they demonstrated that so far.”

But by Sunday afternoon, Social Christian Party spokesman Silva said: “The guerrillas have been fighting in the capital for 18 hours already. That’s not failure.”

The last time the rebels launched an offensive in San Salvador was during the March presidential elections that Cristiani won by a landslide.

They launched a “final offensive” throughout the country in January, 1981. But Red Cross spokesman Carlos Lopez said fighting and casualties in the capital were heavier this time.

EL SALVADOR AT A GLANCE Area: 8,260 square miles; Bounded by Guatemala to north, Honduras to north and east

People: Population 5.2 million, with density of 672 people per square mile, highest in continental Latin America; Language--Spanish; Religion--Roman Catholic

Economy: Agriculture-based, with coffee accounting for more than 70% of exports

History: Gained independence from Spain in 1821; republic declared in 1859; constitution of 1962 suspended following military coup of October, 1979; new constitution adopted in December, 1983; civilian President Alfredo Cristiani took office in June; nation has waged 10-year war with leftist rebels.

BACKGROUND The Farabundo Marti National Liberation Front is El Salvador’s main guerrilla organization. Known by its Spanish initials, FMLN, it was formed in October, 1980. The front comprises five leftist and Communist groups and has a separate political wing, the Revolutionary Democratic Front. The FMLN takes its name from peasant leader Farabundo Marti, who led a peasant rebellion against landowners that was brutally suppressed in 1932. U.S. officials estimate that the FMLN has 6,000 full-time combatants.