Armed with M1 rifles and Israeli-made submachine guns, the Nicaragua National Guard launched an attack yesterday on young rebels who have taken over at least half of this central Nicaraguan city in the past six days.

The assault began at 11 a.m. local time when approximately 60 soldiers marched from the National Guard post in the center of the city, under leadership of the Guard's chief of staff, Maj. Gen. Armando Fernandez, and Interior Minister Antonio Mora.

Only three blocks to the south, crouching behand sandbag barricades and armed primarily with .22-caliber pistols and homemade bombs, was the enemy - local young men and women, mostly of high-school age and some as young as 12, who have vowed to fight the Guard and overthrow the government of President Anastasio Somoza.

A mother, who had taken refuge in the Red Cross center said she had not seen her 15-year-old son for two days.

"As a mother, I hold Somoza responsible for the life of those children," she said. Pointing to a number of men gathered in the Red Cross building, she added, "The children are in there fighting for us, while (the men) haven't had the nerve."

The Guard's advance was a climax in three days of scattered fighting and sniping in the hill city of 60,000 - now the center of the anti-Somoza uprising. At least 29 civilians had been killed here through Wednesday, including three family members shot that day by troops who chased an armed youth into their house.

By late afternoon yesterday, following numerous sporadic exchanges of gun fire, little direct contact had been made. Both sides appeared to be firing wildly at an enemy they could not see.

As the youths ran from barricade to barricade across the city's main streets, each of their small fire-cracker-like pistol shots was met with a loud burst of rifle and automatic fire from soldiers crouched in doorways and sprawled on their stomachs in the street.

The National Guard appeared to be holding back the full force of its firepower, which included one armored vehicle, and there was no indication as to when the battle might end. Hours after it began, the soldiers had moved barely two blocks from the garrison.

Red Cross ambulances parked outside the main entrance to the city entered several times and brought out one dead civilian, apparently an uninvolved passerby, and at least five wounded.

For most of the day, however, crossfire prevented the ambulances from entering the city, and there were no firm reports on casualties. Several times during the day, the Red Cross center was caught in crossfire and nuns with megaphones pleaded with the combatants to stop.

At sunrise, most of those no combatant citizens remaining here had begun a mass exodus on the main road to the south.Many carried their belongings in bundles on their heads, pots and pans swinging from their arms and white flags in their hands. Men and women carried furniture on their backs.

The fleeing citizens said they had seen National Guard reinforcements entering the city throughout the night.

In the morning hours before the attack began, the city seemed surrealistically calm and empty. As a light, steady drizzle fell, those few families remaining inside nailed white flags to their houses and barricaded their doors.

Crouched behind their sandbags, waiting for the attack, the youths called out to anyone approaching to raise their hands, identify themselves and show their faces. Behind their blockades, they shouted to each other, "A free country or deaths."

They appeared to be no more than 60 in number. "Stay and fight with us," they told journalists who ran crouching from barricade to barricade.

Also in the rebel-held zone is the large San Jose church, where some 500 civilians have taken refuge, and the Monserrat Hospital, a private clinic where most of the wounded have been brought over the past several days.

Dr. Jorge Ruiz, 35, a gynecologist who is working along with 18 other local doctors in shifts at the hospital, said food and medical supplies had not entered the city since the siege began, and that the supplies were running out.

The government has called the youths "communist agitators" from outside Matagalpa and members of the guerrilla Sandinista Liberation Front that last week assaulted the national palace in Managua. Ruiz said, however, that "they are all local boys."

"The people are behind them," said another doctor.

"They are high school students," said one mother. "They are fighting for democracy, fighting against Somoza."

The mother, along with many of the townspeople fleeing the city, pleaded with the foreign reporters to "tell the world the truth about what is happening here." Most supported the youths.

At 11 a.m., the Guard sent an earth moving machine, driven by a civilian, down the main road to the first barricade. The orange-painted earth mover, which was supposed to plough through to the other side, came from the Kamatsu Motor Co. owned by Somoza's son, National Guard Maj. Anastasio Somoza III.

When the youths started firing on the driver, he jumped out and ran, leaving the machine at the barricade. The driver of a second earth mover was shot and took refuge under the vehicle.

The soldiers followed behind, their lines quickly broken as they ran into doorways and behind walls. Many were pinned down from sniper fire from behind the barricades and a long indefinite battle began.