Russian troops dealt more punishing blows to rebel Chechnya Friday, bombing the capital, shelling villages and entrenching their positions amid heavy fighting on the city's fringes.

Smoke billowed Friday from a bombed-out Grozny refinery, and the fire threatened to ignite a tank of deadly ammonia nearby, officials said.The Russian government press service reported a major clash between Russian troops and Chechen fighters overnight on the outskirts of Grozny.

Defense Minister Pavel Grachev declared Thursday that his troops were ready to "advance deep into the town." He said there would be no all-out storming but that Russian soldiers would aim at "confiscating weapons and eradicating gangs."

Embattled Chechen President Dzhokhar Dudayev, riding out the air raids in a bunker underneath the presidential palace, renewed his call for peace talks in a telegram to the Russian government, but Moscow did not immediately acknowledge it.

Dudayev, who suspended peace talks on Dec. 14 - three days after up to 40,000 Russian troops poured into the mostly Muslim republic of 1.2 million - has followed up similar previous offers with conditions the Kremlin rejected.

It wasn't clear whether his message Thursday reflected a sincere wish to compromise or an effort to drum up more international pressure on Moscow to halt its bloody 20-day-old offensive aimed at ousting Dudayev and putting down the southern republic's three-year-old independence bid.

In some of the heaviest fighting yet in the campaign, Russian troops on Thursday battered villages and the capital with bombs and artillery shells.