MOSCOW, July 10 (Reuters) - Chechen rebel leader Shamil Basayev, Russia's most wanted man, was killed overnight, handing a huge boost to President Vladimir Putin on Monday as he prepared to host a Group of Eight summit.
FSB security chief Nikolai Patrushev said Basayev, who had claimed responsibility for the bloody 2004 Beslan school siege, had been about to mount an attack in southern Russia to mar the weekend G8 summit Putin will chair in St Petersburg.
Putin, whose already huge popularity at home will be further boosted by the news as he prepares to meet U.S. President George W. Bush and other world leaders, said Basayev's death was "deserved retribution" for his campaign of killing.
More than 331 people, half of them children, were killed in Beslan in September 2004 after Russian forces tried to end a siege of the school, which had been seized by Islamist militants linked to Chechnya's fight for independence.
"This is deserved retribution against the bandits for our children in Beslan, in Budennovsk, for all these acts of terror they committed in Moscow and other Russian regions, including Ingushetia and Chechnya," the Kremlin leader said in televised comments.
Budennovsk was a reference to an attack on a hospital in June 1995 -- long before Putin came to power. Rebels seized hundreds of hostages in the southern town and more than 100 people died during the assault and a botched Russian commando raid.
Patrushev said Basayev, along with other Chechen fighters, was killed in an operation by special forces in Ingushetia, a region neighbouring Chechnya.
"They intended to use this terrorist act to put pressure on Russia's leadership at a time when the G8 summit was being held," Patrushev said.
Details of how Basayev was killed were not entirely clear, nor was the role played by special forces.
TRUCK EXPLOSION
According to state television, he was killed when a truck blew up while rebels were loading it with explosives in the village of Ekazhevo. He himself was sitting in a civilian car nearby and died in the massive explosion.
"There was an enormous explosion. All those who were in a radius of the blast were blown to pieces," Ingushetia's interior ministry Beslan Khamkhoyev was quoted as saying by Interfax news agency.
"In the morgue there are four bodies of fighters. We calculate that the number of fighters eliminated is 10," Khamkhoyev said. He added that the special operation had been meticulously planned.
Chechen rebel envoy Akhmed Zakayev told Ekho Moskvy radio that he doubted the official version. "I do not believe there was some operation carried out by Patrushev and his colleagues. I think this was a fatal accident," he said by telephone from London.
The heavily-bearded Basayev, who was born in 1965, professed to be a devout Muslim. His left foot was blown off by a mine in 2000 and he wore a false one.
Interfax quoted another senior Ingushetia official as saying he had been identified by body fragments, including his head and his prothesis.
Basayev, in a television interview aired last year, justified the attack on Beslan by saying Russian civilians, including children, were legitimate targets in his homeland's bloody fight for independence from Moscow.
"We are at war. Russians ... pay their taxes for this war, send their soldiers to this war, their priests sprinkle holy water on the soldiers," Basayev said in his soft lilt.
"How can they be innocent? Russians are accomplices in this war. It is just they don't all have weapons in their hands," he said in the interview with Britain's Channel 4.
