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A flag belonging to the Islamic State fighters is seen on a motorbike after forces loyal to Syria's President Bashar al-Assad recaptured the historic city of Palmyra, in Homs Governorate in this handout picture provided by SANA on March 27, 2016. REUTERS/SANA/Handout via Reuters

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BEIRUT (Reuters) - Islamic State seized a hilly area southeast of the Syrian city of Aleppo, the militant group and monitors said on Friday, and made further advances near the border with Turkey in fighting that the United Nations said forced inhabitants to flee.

The Islamist insurgents said in a statement that they had gained control over Dureihem and surrounding hills about 65 km 40 miles) southeast of Aleppo, an area that overlooks the government-held town of Khanaser.

Syrian state media reported late on Thursday that the army had engaged in operations against Islamic State near Khanaser, inflicting "large losses" on the insurgents.

The Syrian Observatory for Human Rights monitoring group said clashes had renewed and intensified near Khanaser as part of a fresh IS assault, and that the militants had used a car bomb against government forces later on Friday.

Fighting between the army and Islamic State in the area had been raging earlier as the government sought to regain control there, the Britain-based Observatory said.

The United Nations said that as of Thursday, an Islamic State attack on border areas held by Syrian rebel groups had put camps for displaced people at risk, causing more than 20,000 of them of them to flee towards the opposition-held town of Azaz.

On Monday, Islamic State retook the town of al-Rai, 36 km (22 miles) east of Azaz, from factions fighting under the banner of the Free Syrian Army, part of months of back-and-forth fighting in northern Aleppo province.

IS fighters made further gains on Friday in the area, taking over the village of Tal Shair west of al-Rai and also a few km (miles) from the Turkish border, the Observatory and Islamic State's Amaq news agency reported.

The Observatory said IS militants were also shelling the town of Marea, directly north of Aleppo city.

The Syrian army backed by Russian warplanes launched an assault north of Aleppo on Thursday, threatening to block a vital rebel route into the city in fighting that has cast new clouds over peace talks in Geneva.

(Reporting by Angus McDowall; Edeiting by Mark Heinrich)

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