By Daren Butler

ISTANBUL (Reuters) - A blast ripped through a street in the northern Syrian town of al-Rai on Sunday in what was believed to be an Islamic State suicide bombing, with several deaths reported and security and hospital sources saying 12 wounded, mostly children, were taken to a hospital in nearby Turkey.

The town of al-Rai, which is 2 km (1 mile) south of Turkey's Kilis border province, is in an area under the control of Turkey-backed rebels and was seized from Islamic State militants in Ankara's "Euphrates Shield" operation launched in August.

Local sources said the explosion was caused by a vehicle-borne bomb which killed several people, according to Turkey's Dogan news agency. The casualty toll could not be confirmed.

The Turkey-backed rebels have for days been besieging the IS-controlled town of al-Bab, around 30 km south of al-Rai, as part of the three-month-old offensive to drive the jihadists away from the Syrian side of the Turkish border.

Turkey's army earlier said IS militants fired a rocket into the Haliliye area of the same region that caused symptoms of "chemical gas" exposure in 22 Syrian rebels, according to the state-run Anadolu news agency.

The rebels were transferred to a Turkish hospital on suspicion of chemical poisoning after complaining of constant sickness and severe headaches following the attack, the Hurriyet website reported.

But Anadolu said a subsequent analysis by Turkey's disaster and emergency organization AFAD did not detect chemical materials and the symptoms were regarded as having been caused by a tear gas-like substance.

Turkish jets on Saturday destroyed four Islamic State targets in the Anifah region, and one Turkey-backed Syrian rebel was killed and 14 wounded in clashes, the army said.

On Thursday, three Turkish soldiers were killed in an air strike which the army believed was carried out by the Syrian air force. It happened on the first anniversary of Turkey's downing of a Russian jet over Syria and raised fears of an escalation in the conflict.

Turkey subsequently deployed low-altitude air defense systems with Stinger missiles to the border area, Dogan said.

Turkey's President Tayyip Erdogan discussed the air strike with Russian counterpart Vladimir Putin on Friday. They spoke again late on Saturday about "Syria and efforts to resolve the humanitarian drama in Aleppo", sources in Erdogan's office said.

Russia is Syrian President Bashar al-Assad's main military backer. Turkey backs rebels fighting to oust him.

Ankara and Moscow only restored ties, which had been damaged by last November's jet incident, in August. While they continue to pursue conflicting goals in Syria, Turkey has of late been less openly critical of Assad than in the past.

(Writing by Daren Butler; Editing by Andrew Bolton)