By Tom Perry

GAZIANTEP, Turkey (Reuters) - A smoldering confrontation between Syrian armed groups backed by the United States but hostile to each other is escalating, complicating the fight against Islamic State in the war-torn country.

Syrian Arab rebels under the Free Syrian Army (FSA) banner say they are in a growing struggle against the Kurdish YPG militia that are helping the United States wage its campaign against IS in Syria.

On June 12, one of the many FSA groups in the Aleppo area fired a guided TOW missile at a YPG position, the first attack of its kind, the British-based Syrian Observatory for Human Rights and YPG said.

The two sides have different priorities in the war, with the FSA rebels battling to oust President Bashar al-Assad, while the YPG is trying mainly to carve out its own areas of control in northern Syria.

Each side also accuses the other of conspiring with its enemies in a struggle with an ethnic dimension pitting groups drawn from Syria's Arab majority against one that emerged in 2011 with the stated aim of defending the Kurdish minority.

"There is a deepening divide between us," the politburo chief of the Jabha Shamiya, one of the biggest FSA rebel groups in the Aleppo area. "If there is no quick political solution between the revolutionaries and the Kurds, it is heading towards escalation."

YPG spokesman Redur Xelil said his group did not aim to spark a battle with FSA groups. But he added: "If they want a war, they will certainly lose."

More than five years since it began, there is no end in sight to the war in Syria that has created the world's worst refugee crisis, helped the rise of Islamic State, drawn in foreign states, and killed several hundred thousand people.

Now, the escalating clash between the two U.S.-backed groups has exposed a fault-line that presents a challenge to the anti-IS campaign as it moves into predominantly Arab areas east of Aleppo with YPG support, starting with the city of Manbij.

DISTRUST OVER INTENTIONS

While the YPG has been an effective force against IS, the rebels say it cannot stabilize Arab areas captured from the jihadists. They compare it to Shi'ite militias that are fighting IS in Iraq but are mistrusted by its Sunni population.

The United States appears keenly aware of the sensitivities. A U.S. official said more Arabs had been brought into the Syria Democratic Forces (SDF), an alliance formed last October to fight IS that draws heavily on YPG firepower.

"We’ve been working hard to diversify the force," the official said. Many of the fighters in the Manbij attack were displaced residents of the city, control of which would be handed to a local holding force once it is captured.

"There is a lot of distrust obviously about the intentions, about right of control, about inclusiveness. We are extremely sensitive to that," the U.S. official said.

The YPG-FSA rivalry is focused in a northwestern corner of Syria where all the main players are engaged in one way or another, including Russia whose air strikes have turned around the fortunes of Assad, their ally in the Middle East.

FSA rebels are part of the nationalist opposition to Assad, who is also being fought by al Qaeda-linked groups. A number of groups receive military aid in a covert, CIA-backed program.

The YPG is one of the most powerful militias in Syria and seen as the backbone of the SDF, whose campaign in Manbij is supported by U.S.-led air strikes and American special forces.

For rebels, Aleppo province is critical for reasons including its position at the Turkish border. Rebels are struggling to keep open routes into the opposition-held sector of Aleppo city, while also battling Islamic State to the north.

The YPG, meanwhile, controls the nearby region of Afrin, from where it advanced into rebel areas north of Aleppo earlier this year. The rebels saw it as a coordinated attack with Damascus and Russia. The YPG denies this.

The YPG also controls much of northeastern Syria, where its political allies are working to entrench regional autonomy in a system they say will give rights to all groups.

The anti-Assad opposition views it as part of a separatist project. With the wind in the SDF's sails, analysts see a risk the YPG may want to advance from Manbij all the way to Afrin, aiming to steamroll the FSA rebels near Aleppo in the process.

GENERATING INSTABILITY?

The U.S. official, however, said that advancing west from Manbij towards Aleppo was not part of the SDF plan. That may point to U.S. sensitivity over the concerns of neighboring Turkey which opposes further growth of YPG influence in Syria.

Senior International Crisis Group Analyst Noah Bonsey said it would be better for all if Turkey, the rebels and the YPG struck a deal on a division of labor to drive IS from the northern Aleppo area, and on who would control it afterwards.

Turkey is deeply suspicious, however, of the Kurdish YPG because of its links with the Kurdistan Workers' Party (PKK). The PKK has waged a three-decade insurgency in southeast Turkey.

The YPG-FSA conflict has also spilled into Aleppo itself, whose Sheikh Maqsoud district is under YPG control. Rebels accuse the YPG of aggression by firing on the only road into opposition-held Aleppo. In turn, rebels have shelled it heavily.

The TOW missile attack was a notable escalation. The YPG said it had notified the United States, saying the weapon was supplied under the U.S.-backed program. Reuters could not confirm the attack with rebel officials.

Rebels warn of the ethnic dimension to the struggle, fueled by the displacement of Arabs in YPG offensives. Kurdish officials have consistently denied claims of ethnic cleansing of places such as Tel Rifaat, captured by the YPG in February.

Only a few of the Arabs who fled there have returned, the Observatory says. It attributes that to fear, not a YPG policy to stop them, however. Saleh Muslim, head of the Syrian Kurdish PYD party, told Reuters the diversity of the forces in Manbij showed there was no Arab-Kurdish problem.

But Zakaria Malahefji, an official with an Aleppo-based FSA group, said he warned U.S. officials they were naive to believe the YPG would cede control of areas captured from IS.

"The people ... feel there is significant coordination between the regime and YPG," he said. "This will generate sensitivities and these areas will not be stable."

(Additional reporting by Warren Strobel in Washington; Writing by Tom Perry and Peter Millership)