By Katie Paul

NAJRAN, Saudi Arabia (Reuters) - Yemeni Houthi forces are again firing rockets at this corner of southern Saudi Arabia, ending a lull of several weeks and complicating efforts to revive talks on ending Yemen's 18-month-old civil war.

This month's collapse of negotiations on the Yemen conflict - which like the Syrian civil war pits allies of Saudi Arabia against those of its regional rival Iran - is taking a toll in the Saudi city of Najran, albeit on a much smaller scale than in Yemen itself.

Last week, one rocket fired by the Iranian-allied Houthi movement from northern Yemen landed in Najran, which lies 30 km (20 miles) from the border. It hit a car scrap yard, killing five Saudis and two Yemenis as they were driving past.

Another hit a Saudi Electricity Company (SEC) power station in Najran on Friday, spilling diesel from a punctured tank into acrid black lakes coating the surrounding streets.

On Saturday, nine-year-old Mahdi Saleh Abbas sat lying in a hospital bed with bandages over his eyes and shrapnel wounds pockmarked on his face. His cousin Yehyia, 3, had died that morning after a Katyusha rocket landed outside their home.

"They were playing. They're kids. It was normal," said Mahdi's father, Saleh, standing over his son's bed.

ROCKETS

Saudi Arabia and its Sunni Muslim allies view the Houthis, who hail from a branch of Shi'ite Islam, as proxies of Iran. The Houthis deny this, saying the exiled Yemeni government and the Saudis are Western pawns bent on dominating Yemen and excluding them from power.

The Houthi attacks on Saudi territory started anew in early August, which is also when a Saudi-led coalition resumed air strikes in Yemen against the Houthis and their local allies.

Saudi authorities say the latest wave of shelling has killed 29 civilians and injured around 300 in Najran, a city framed by jagged brown mountains that separate Saudi Arabia from Yemen.

Those figures are much smaller than the number of civilians killed by the coalition air strikes in support of the internationally-recognised government, for which the Saudi military has come under increasing criticism.

The United Nations human rights office said on Thursday that the coalition was responsible for 60 percent of the 3,799 civilians killed in Yemen's war. The coalition says it does not target civilians.

Still, the Najran casualties point to the Saudis' difficulties in securing their border against the more mobile Houthi forces and allies loyal to former Yemeni president Ali Abdullah Saleh, even as the Houthis lob mostly unsophisticated Katyusha rockets into their territory.

The shelling had trailed off for several months as the peace talks held in Kuwait pushed forward. But in the last three weeks, after the negotiations crumbled, the rockets resumed.

U.S. Secretary of State John Kerry said last week he had agreed with Gulf Arab states and the U.N. on a plan to restart the talks.

However, he said the Houthis must cease shelling across the border, pull back from the Yemeni capital Sanaa which they took control of two years ago, cede their weapons and enter into a unity government with their domestic foes.

Yemen's Houthi-run governing council said on Sunday it was ready to restart the talks, provided the coalition stopped attacking and besieging Houthi-held territories.

That same night, another rocket fell in Najran and killed two young girls, said the civil defence department.

NO MILITARY SITES

On Saturday, the Saudi information ministry escorted foreign journalists on a tour of parts of Najran city directly affected by the shelling, highlighting civilian suffering.

"They've hit schools, hospitals, civilian government buildings, markets," said Colonel Ali Omeer al-Shahrani, a spokesman for Najran's Civil Defence department, showing reporters photos of damage caused by the about 10,000 rockets launched on Najran since the start of the war.

There were no military sites within the city of Najran, he said, "just civilian and residential areas".

Najran residents interviewed at the city's King Khaled Hospital likewise decried the attacks, using government-approved terminology to describe the Houthis and their allies.

"A Houthi is an untrustworthy person. He lies. He targets civilians," said Manea al-Ghobari, a 39-year-old teacher in Najran. "They can't hit our army or our soldiers at the border, so they're hitting civilians in their homes instead."

A Saudi government official followed the group of journalists throughout the day, filming the interviews.

STABLE SERVICES

Still, even as the attacks accelerate, life appears to carry on as normal for much of Najran. There were no signs of militarisation inside the city on Saturday: no checkpoints, no tanks, no heavily-guarded ammunition depots.

Instead, on the main road through town, the shops were open and active. Down the block from a man selling water melons off the back of a pickup truck, a Paris Hilton store advertised luxury handbags and accessories.

Although Houthi rockets have hit both water and electrical facilities, service provision to residents there was never interrupted, said Shahrani.

In the industrial eastern part of town, the most frequent target of attacks, the damage was more evident.

Pools of black diesel covered the streets, leaked from the SEC power station that had been struck the day before. Machines lay mangled and blackened by a fire that swept the plant after the strike.

An SEC spokesman said its service to the city was "solid and reliable". Asked about the financial effect of the damage to the facility, he said that neither the company nor its customers had experienced any impact.

(Reporting by Katie Paul, Editing by William Maclean and David Stamp)