Russia's bombardment of Grozny, the capital of Chechnya, has caused civilian casualties that may reach the hundreds, left residential buildings in ruins, destroyed a city hospital and littered the streets with craters nearly 30 feet wide, according to reports from the besieged city today.

Although precise figures have been difficult to confirm, Grozny Mayor Lecha Dudayev told the Interfax news agency that more than 260 people were killed in residential areas and the death toll could reach 500. Residents who had taken cover in basements continued to flee toward neighboring Ingushetia, where vehicles were backed up six miles from a border checkpoint.

The fierce bombardment, in defiance of Western appeals to stop indiscriminate attacks, began Thursday night and went into Friday morning. Russian troops blasted the city from hilltops to the north and from Grozny's southern outskirts, using long-range artillery and Grad multiple-rocket launchers.

Interfax reported from Grozny that "roofs have been torn off [and] windows and doors shattered in the buildings that remained standing." The Gorelectroseti energy company building "is in ruins," the agency said, a fuel storage facility was on fire and a city hospital was destroyed.

Piles of rubble and bomb craters in the streets "make it almost impossible to drive" in Grozny's Oktyabrsky and Leninsky districts, Interfax said. On one street, houses "have been leveled and only chimneys remain upright." It is impossible to buy food at any price in Grozny, Interfax said.

Russian forces tonight were engaged in a fight with Islamic guerrillas for the main artery leading out of Grozny to the town of Urus-Martan to the south, which the guerrillas control. News reports said Russian troops had tried, but so far failed, to close the road.

Russia's campaign to eradicate the guerrillas has brought the government into an escalating conflict with Western leaders, who have called for a settlement. Michel Camdessus, the outgoing managing director of the International Monetary Fund who has often backed loans for Russia, said today that negative world reaction to the Chechen offensive could put Russia's IMF loans at risk.

"We cannot go forward with the financing if the rest of the world doesn't want to," Camdessus told reporters at a business seminar in Madrid, according to the Reuters news agency. Russia has been pressing the IMF to release the second $640 million of a $4.5 billion loan package agreed to in July.

"The violent military campaign in Chechnya is creating very negative reactions against Russia in the world," Camdessus said. "I suppose when the time comes for a decision on the [loan] program, IMF directors will reflect world opinion on this matter." Russian news reports have said an IMF board meeting on the Russian loans is on the agenda for December.

The bombardment of Grozny came as Russian commanders said they were beginning a new phase of the military offensive in Chechnya, where Moscow has sent nearly 100,000 troops to the general acclaim of the Russian public, which blames Chechen extremists for a series of terrorist attacks in Moscow and other parts of Russia. In the earlier stages of the offensive, Russian forces cordoned off the breakaway region, then occupied its northern part and its second-largest city, Gudermes.

From the west and east, the Russian troops have fought Chechen militants in smaller towns and are now encircling most of the capital. In order to minimize casualties, Russian commanders have insisted they will not repeat the bloody frontal attack on Grozny of five years ago, but they are edging closer to direct combat with the Chechens, who are fortified inside the city. The Russian military headquarters in Mozdok, located in nearby North Ossetia, issued a statment saying "the blockade ring will be tightened" around Grozny.

"The Russian side is regrouping its forces," Turpal Atgeriev, the Chechen security minister, said in an interview broadcast on NTV, Russian commercial television. "The purpose of it is clear to us. We of course have our own plans and agenda, and I think the near future will see a change in the course of combat operations."

Asked if he expects a storming of Grozny, he said, "We want this storming and a contact with Russian troops. But the Russian army has changed its tactics. It is avoiding contacts with us. It is striking by artillery and aviation."

Graphic video footage that shows about a dozen Russian soldiers bloodied and sprawled dead in the snow was broadcast here tonight, but the cause of the deaths was in dispute. The Chechens said it was part of a massive assault against the Russians near the town of Vedeno that killed 200. But NTV said the group was a reconnaissance squad that had collided with the Chechen guerrillas.

On Friday, Russian officials said the new phase of their offensive would entail launching attacks on the Chechen fighters in the foothills of the southern mountains. On a tour of the Russian Far East today, Gen. Anatoly Kvashnin, chief of the general staff said that Russia will seal Chechnya's western border with the republic of Georgia.

"The first and second phase of the operation were designed to liberate the plains of Chechnya, where 90 percent of the population lives," Kvashnin said. "The aim of the third phase is to close off the border with Georgia and other places so that the bandit gangs cannot receive succor from abroad.

"The military campaign in Chechnya will not be suspended or slowed down, and the primary aim is to see it through with minimum losses."

Moscow's official representative in Chechnya, Nikolai Koshman, told reporters today that the entire Russian-Georgian border will be "reliably closed" within a month or two.

CAPTION: In Gudermes, east of Grozny, a Russian soldier sets off a blast at a small refinery.