* UAE-backed Yemeni forces battle Houthis in key regions
* Raid would mark escalation in regional hostilities
* Most Houthi drone attacks were aimed at Saudi Arabia
* U.N. chief condemns attack, calls for maximum restraint
* Abu Dhabi trying to improve ties with Iran (New throughout, adds response from U.S. State Department)
By Ghaida Ghantous and Alexander Cornwell
DUBAI, Jan 17 (Reuters) - Yemen's Iran-aligned Houthi group attacked the United Arab Emirates, setting off explosions in fuel trucks that killed three people on Monday and caused a fire near the airport of Abu Dhabi, drawing condemnation from the United States.
The strike on a leading Gulf Arab ally of the United States takes the war between the Houthi group and a Saudi-led coalition to a new level, and may hinder efforts to contain regional tensions as Washington and Tehran work to rescue a nuclear deal.
"The UAE condemns this terrorist attack by the Houthi militia on areas and civilian facilities on Emirati soil...(It) will not go unpunished," the foreign ministry said in a statement. "The UAE reserves the right to respond to these terrorist attacks and criminal escalation."
National Security Advisor Jake Sullivan in a statement said "The United States strongly condemns today's terrorist attack in Abu Dhabi in the United Arab Emirates, which killed three innocent civilians. The Houthis have claimed responsibility for this attack, and we will work with the UAE and international partners to hold them accountable."
The Houthi group said that missiles and drones carried out the strike.
The UAE, a member of the Saudi-led coalition, has armed and trained local Yemeni forces that recently joined fighting against the Houthis in Yemen's energy-producing Shabwa and Marib regions.
"With (nuclear) negotiators running out of time, the risk of a deterioration in the region's security climate is rising," said Torbjorn Soltvedt, principal MENA analyst at risk intelligence company Verisk Maplecroft.
The Houthi movement has frequently launched cross-border missile and drone attacks on Saudi Arabia, but has claimed few such attacks on the UAE, mostly denied by Emirati authorities.
Houthi military spokesman Yahya Sarea said the group launched five ballistic missiles and "a large number" of drones at Dubai and Abu Dhabi airports, an oil refinery in Musaffah and several "sensitive and important" sites in the UAE.
Abu Dhabi police said three people were killed and six wounded when three fuel tanker trucks exploded in the industrial Musaffah area near storage facilities of oil firm ADNOC. State media said those killed were two Indians and a Pakistani.
Abu Dhabi police said initial investigations found parts of small planes that could possibly be drones at the sites in Musaffah and Abu Dhabi airport, but they made no mention of missiles.
ADNOC said an incident at its Mussafah Fuel Depot at 10 a.m. local time had resulted in a fire. Police closed the road leading to the area, where unverified footage on social media had shown thick black smoke.
"ADNOC is deeply saddened to confirm that three colleagues have died. A further six colleagues were injured and received immediate specialist medical care," it said.
An Etihad Airways spokesperson said a small number of flights were briefly disrupted at Abu Dhabi airport due to "precautionary measures", but normal operations quickly resumed.
The Houthi military spokesman warned the group could target "more important" facilities in the UAE next.
PROXY FIGHT
United Nations Secretary-General Antonio Guterres condemned Monday's attack and called "upon all parties to exercise maximum restraint and prevent any escalation amid heightened tensions in the region," his spokesperson said.
Riyadh and Abu Dhabi had moved to engage https://www.reuters.com/world/stuck-middle-uae-walks-tightrope-between-us-israel-iran-2021-12-12 directly with Iran in recent months to avoid any wider conflict that could hurt regional economic ambitions. The Yemen war is widely seen as a proxy war between Sunni Muslim Saudi Arabia and Shi'ite Iran.
The Houthi strike could derail UAE and wider Gulf dialogue with Iran, said UAE political analyst Abdulkhaleq Abdulla.
"The UAE is not going to take this very lightly," he said.
The attack coincided with a visit to the UAE by South Korean President Moon Jae-in. A Blue House official said a summit between Moon and Abu Dhabi's crown prince was cancelled.
Given the range of Houthi attacks against Saudi Arabia it was not "technically surprising" the group would be able to hit UAE targets, said Jean-Loup Samaan, senior research fellow at the National University of Singapore's Middle East Institute.
Other Gulf Arab states condemned the attack. There was no immediate comment from Iranian officials, but Iran's Tasnim news agency reported it as an "important operation". (Additional reporting by Maha El Dahan, Ahmad Elhamy, Mahmoud Mourad, Lisa Barrington, Aziz El Yaakoubi, Saeed Azhar, Raya Jalabi, Parisa Hafezi, Michelle Nichols, Hyonhee Shin, Rami Ayyub and Moataz Mohamed; Editing by William Maclean, Paul Simao and David Gregorio)
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