Jan 8 (Reuters) - A dispute over territorial control in southern Yemen has set erstwhile Gulf allies Saudi Arabia and the United Arab Emirates against each other and fractured the coalition fighting the Iran-backed Houthis.

The separatist Southern Transitional Council, backed by the UAE, seized swathes of territory across southern and eastern Yemen last month but it has mostly been retaken by Saudi-backed fighters.

BEIRUT, Jan 8 (Reuters) - Lebanon's central bank will seek the repayment of public funds embezzled by at least one former central bank official and by lawyers and commercial bankers, to help guarantee its liquidity, Central Bank Governor Karim Souaid said on Thursday.

Souaid did not name Riad Salameh, the former central bank governor whose 30-year term ended in disgrace amid investigations into whether he embezzled more than $300 million between 2002 and 2015.

By Nidal al-Mughrabi and Jana Choukeir

CAIRO/DUBAI, Jan 8 (Reuters) - Israel's military said on Thursday it had carried out a targeted strike on a rocket launch site near Gaza City after identifying a failed launch, as questions mount over when the next phase of the Gaza ceasefire will begin.

The military said the projectile did not cross into Israeli territory and that the launch site was struck shortly after the attempt was detected.

By Jana Choukeir

Jan 8 (Reuters) - The Syrian army clashed with fighters from the Kurdish-led Syrian Democratic Forces (SDF) in parts of Aleppo on Thursday and ordered residents to evacuate, accusing the SDF of using Kurdish-majority areas to launch attacks, according to Syrian state media.

The army released more than seven maps identifying areas it said would be targeted in strikes, urging residents to leave immediately for their safety. Its operations command announced a curfew in the neighbourhoods of Sheikh Maqsoud and Ashrafieh from 3 p.m. (1200 GMT).

Clashes between Syrian government and Kurdish forces in Aleppo raged into the night Thursday on the third day of fighting, as Syrian Kurdish leader Mazloum Abdi warned the violence undermined talks with Damascus.

Both sides have traded blame over who started the clashes on Tuesday, which comes as implementation stalls on a deal to merge the Kurds' administration and military in the northeast into the government.

Spain is ready to send troops to Palestine for peacekeeping "when the opportunity presents itself," just as it is willing to deploy forces to Ukraine, Prime Minister Pedro Sanchez said Thursday.

"I will propose to parliament, when the opportunity presents itself, that we send peacekeeping troops to Palestine, once we can see how to advance this task of pacification," he told a gathering of Spanish ambassadors in Madrid.

DUBAI, Jan 8 (Reuters) - Iran's president warned domestic suppliers against hoarding or overpricing goods, state media reported on Thursday, as Tehran rolls out high-stakes subsidy reforms during nationwide protests against economic hardship.

"People should not feel any shortage in terms of goods' supply and distribution," Masoud Pezeshkian said, calling upon his government to ensure adequate supply of goods and monitoring of prices across the country.

By Ece Toksabay

ANKARA, Jan 8 (Reuters) - Turkey said on Thursday it is ready to help Syria if asked after the Syrian army independently launched a "counter-terrorism" operation in Aleppo, where fierce fighting broke out in recent days between government forces and Kurdish fighters.

Turkey's Defence Ministry said at a briefing that the Aleppo operation was "carried out entirely by the Syrian army," implying no Turkish involvement.

Turkey's military is ready to "support" Syria in its battle with Kurdish fighters in the northwestern city of Aleppo if Damascus asks for help, a defence ministry official said Thursday.

And Turkey's top diplomat said Ankara had been working "intensively" with Syrian and American officials in a bid to end the unrest.

Deadly clashes erupted this week between Syrian government forces and the Kurdish-dominated Syrian Defence Forces (SDF) after the two sides failed to reach a year-end deadline to merge the Kurdish fighters into the main Damascus military.

Iranian protesters on Thursday stepped up their challenge to the clerical leadership with the biggest protests yet of nearly two weeks of rallies, as authorities cut internet access and the death toll from a crackdown mounted.

The movement, which originated with a shutdown on the Tehran bazaar on December 28 after the rial currency plunged to record lows, has spread nationwide and is now being marked by larger-scale demonstrations, including in the capital.