By Stephen Kalin and Dominic Evans
KOKJALI/BAGHDAD, Iraq (Reuters) - Islamic State leader Abu Bakr al-Baghdadi told his followers on Thursday there could be no retreat in a "total war" against the forces arrayed against them, as advancing soldiers battled into their northern Iraqi stronghold of Mosul.
Expressing confidence that his Islamic State fighters would prevail against Shi'ite Muslims, Western "crusaders" and Sunni "apostate" countries Turkey and Saudi Arabia, Baghdadi called on the jihadists fighting in Mosul to "wreak havoc".
"This raging battle and total war, and the great jihad that the state of Islam is fighting today only increases our firm belief, God willing, and our conviction that all this is a prelude to victory," Baghdadi said in an audio recording released online by supporters.
Iraqi regular troops and special forces, Shi'ite militias, Kurdish peshmerga fighters and other groups backed by U.S.-led air strikes launched a campaign two weeks ago to retake Mosul.
Winning back the city would signal the defeat of the Iraqi half of a crossborder caliphate which Baghdadi declared from the pulpit of a Mosul mosque two years ago. Islamic State also holds large parts of neighboring Syria.
In his first audio message released in nearly a year, Baghdadi called on the population of Mosul's Nineveh province "not to weaken in the jihad" against the "enemies of God".
He also called on the group's suicide fighters to "turn the nights of the unbelievers into days, to wreak havoc in their land and make their blood flow as rivers".
Those tempted to flee should "know that the value of staying on your land with honor is a thousand times better than the price of retreating with shame".
Shortly after Baghdadi's speech was released at around 2 a.m., residents said heavy explosions shook eastern Mosul. One said the militants fired dozens of rockets towards the Intisar, Quds and Samah districts where soldiers have been closing in.
"We heard the sounds of rockets firing one after the other and saw them flashing through the air. The house was shaking and we were terrified, not knowing what was taking place."
Fighters were on the street, unusually showing their faces, he said. "They were saying 'We will fight till death. The caliph gave us a morale boost to fight the infidels'," he said. nL8N1D42Y1]
Another witness from the Hadba neighborhood of north Mosul said that Islamic State vehicles patrolled the area and blasted out Baghdadi's speech, urging fighters to hold their positions.
Outside the city's eastern limits, hundreds of civilians streamed out, packed into cars, pickups and trucks, waving white flags and hooting horns. Cows and sheep also filled the road from Kokjali, on the eastern edge of Mosul.
Fleeing residents said there had been heavy mortar fire launched by retreating Islamic State fighters.
By mid-morning, a Reuters correspondent in Kokjali saw smoke rising from inside Mosul but there were no sounds of fighting.
After special forces broke through Islamic State defensive lines in the east this week, troops from the army's Ninth Armoured Division breached the southeastern perimeter of the city on Thursday, advancing towards the Mithaq and Intisar neighborhoods, a colonel in the division said.
Four soldiers were killed when two armored personnel carriers were hit by rocket and mortar fire, he said. Despite the heavy resistance, the soldiers made advances during the day, according to a military statement later on Thursday.
A senior special forces commander said troops were fighting in four neighborhoods in the east, and if they made further progress they might try to sweep through the eastern half of the city all the way to the River Tigris, bypassing some districts.
"If I want to speed up the operation, we may not take some areas and instead isolate them to prevent movement. That would reduce the time needed to reach the right bank," Lieutenant-General Abdul Ghani al-Assadi, commander of Iraq's elite Counter Terrorism Service (CTS), told Reuters.
The exact location of Baghdadi, an Iraqi whose real name is Ibrahim al-Samarrai, is not clear. Reports have said he may be in Mosul itself, or in Islamic State-held land to the west of the city, close to the border with Syria.
British Foreign Secretary Boris Johnson said intelligence suggested that Baghdadi had "vacated the scene", but he did not say where the Islamic State leader had gone to.
Mosul still has a population of 1.5 million people, much more than any of the other cities captured by Islamic State two years ago in Iraq and Syria.
Iraqi troops and Kurdish peshmerga fighters have closed in on it for two weeks from the north, from the eastern Nineveh plains and up the River Tigris from the south.
The Hashid Shaabi (Popular Mobilisation) forces of mainly Shi'ite militias joined the campaign on Saturday, launching an offensive to cut off any supply or escape to the west.
The leader of the Badr Organisation, the largest of the Popular Mobilisation militias, said his forces would cut off the main western supply route on Thursday, leaving Islamic State surrounded.
A spokesman for the militias later said they had made progress but had not closed off the western flank, and had seen from a distance some cars leaving Mosul.
Senior Kurdish politician Hoshiyar Zebari said that Islamic State blew up parts of a bridge over the Tigris linking the two sides of Mosul, to try to prevent fighters abandoning the eastern districts.
"It's the most important bridge for them because it leads to their headquarters and residential areas (on the western side)," he told Reuters. Residents said there had been two explosion at the bridge, stopping traffic in both directions.
TARGETING TURKEY AND SAUDI
In his speech, Baghdadi called for attacks on Turkey and Saudi Arabia, saying the Sunni countries had both sided with the enemy in a war targeting Sunni Islam.
Islamic State fighters should "unleash the fire of their anger" on Turkish troops fighting them in Syria, and take the battle into Turkey.
"Turkey entered the zone of your operations, so attack it, destroy its security, and sow horror within it. Put it on your list of battlefields. Turkey entered the war with the Islamic State with cover and protection from Crusader jets," he said referring to the U.S.-led air coalition.
Baghdadi also told his followers to launch "attack after attack" in Saudi Arabia, targeting security forces, government officials, members of the ruling Al Saud family and media outlets, for "siding with the infidel nations in the war on Islam and the Sunna (Sunni Muslims) in Iraq and Syria".
Islamic State has been on the retreat since last year in both Iraq and Syria, in the face of a myriad of different forces seeking to crush the hardline group.
Iraqi Prime Minister Haider al-Abadi said the conflict with Islamic State had caused colossal damage to the country, already struggling to cope with low oil prices. He said infrastructure losses alone amounted to $35 billion.
(Additional reporting by Ahmed Tolba and Mostafa Hashem in Cairo, and Maher Chmaytell, Ahmed Rasheed and Saif Hameed in Baghdad, editing by Giles Elgood and Angus MacSwan)