INSURGENTS ATTACK IN DAMASCUS NICOSIA [MENL] -- Identified insurgents have launched a major attack against security forces and diplomatic installations in Syria. Insurgents, who Syrian sources said appear to be alligned with Al Qaida, detonated bombs and opened fire toward targets in Mazeh, a Damascus neighborhood filled with diplomatic residences. At least two people were killed in the attacks, including one bystander outside the British embassy and a police officer. Western diplomatic sources said grenades were hurled toward the British, Canadian and Saudi embassies in Mazeh. But a British diplomat said the embassy was not damaged and no British nationals were injured. The Beirut-based Al Manar television of Hizbullah reported that Syrian security forces killed two of the insurgents and injured two others. The television said the insurgents attacked several embassies as well as the United Nations headquarters in Syria. No insurgency group claimed responsibility. In March, more than 100 Kurds were killed in clashes with Syrian security forces near the Turkish border. But diplomatic sources said the attack appeared to be that of Al Qaida-aligned insurgents. In an unusual development, Syria acknowledged the attack. Syrian television reported on late Tuesday that a gunbattle took place in the western Damascus neighborhood between unidentified insurgents and Syrian security forces. The official Syrian news agency asserted that what it termed a terrorist group opened fire on Syrian security forces in Mazeh. "The competent security authorities confronted the terrorist group and the situation was completely controlled," a security source was quoted by the Sana news agency as saying. Earlier, Sana reported that the UN building was set ablaze in the rocket-propelled grenade attack and that three insurgents were killed and another was wounded and captured. About an hour later, Sana revised its report and denied any attack on Western embassies or the UN. By late Tuesday, a Syrian commentator, Imad Shueibi, told A-Jazeera television that two insurgents were killed and another was captured. Reports from the site of the attacks remained sketchy. The Saudi-owned Al Arabiya satellite channel reported more than 15 bombings along a street that housed the embassies of Britain, Canada and Iran. The regime of President Bashar Assad did not demonstrate signs of panic during the one-hour attack. Israel Radio monitor Michael Gurdus said at no time did Syrian authorities close its air space to foreign airliners. The attack comes amid accusations by Jordan and the United States that Syria has facilitated the entrance of Al Qaida-aligned insurgents into Iraq and Jordan. On Monday, Jordan's state television aired the confessions of three Al Zarqawi agents captured before they could implement their plan to bomb and gas Jordanian government buildings and Western diplomatic installations in Jordan. The explosives, chemical weapons and some of the cell members were said to have come from Syria. The United States has accused Syria of facilitating the smuggling of insurgents, weapons and money to Iraq. U.S. officials have identified the Obeida and Shamar tribes as directing the smuggling effort in coordination with an Iraqi fugitive based in Syria.