Clash between drug gang and Mexican army kills 17

ACAPULCO, Mexico (Reuters) - Fifteen drug hit men and two soldiers were killed in a shootout in the Mexican beach resort of Acapulco, an army source said on Sunday.

Gunmen battled troops from a house, throwing hand grenades at soldiers who had surrounded them and spraying gunfire into military vehicles and nearby homes.

The firefight, near tourist hotels, began late on Saturday and went on until after midnight.

Four policemen were found inside the home but it was unclear whether they had been kidnapped or were there voluntarily. Soldiers also confiscated dozens of rifles and other weapons.

President Felipe Calderon has staked his presidency on crushing drug gangs whose turf wars have killed about 2,300 people so far this year. Some 45,000 troops and federal police have been deployed across the country.

Rival drug gangs fought over territory in Acapulco, on the Pacific Coast, several years ago but the resort town has been relatively free of drug violence in recent years.

Drug violence across the country has damaged investor sentiment and the U.S. government is concerned by instability in Mexico, its ally and a big oil supplier.

U.S. President Barack Obama visited Mexico City in April, praised Calderon for tackling the drug gangs and offered more U.S. help in the war.

Drug violence has tarnished the reputation of Mexico's beach resorts, like Cancun and Ixtapa.