FACTIONS BATTLE FOR CAPITAL CITY OF SOUTH YEMEN

Street battles raged in the capital of Southern Yemen today after an attempted coup against the Marxist Government there by a more hard-line, pro-Soviet faction, according to reports received here.

In Aden, the capital, bombs were dropped on the airport, ships in the harbor exchanged fire with tanks along the shore and there was heavy fighting in several key districts as the factions struggled for control, according to the fragmentary reports by radio from diplomats in the city and merchant seamen trapped in the harbor. Military Split Is Seen

The fighting appeared to indicate a split in the 27,500-member, Soviet-equipped armed forces of Southern Yemen, a 19-year-old nation at the mouth of the Red Sea. It is bordered by Saudi Arabia on the north, Oman on the east and Yemen on the north and west.

The Soviet Union maintains naval bases in Aden, once a major British base, and on the island of Socotra, strategically situated in the shipping lanes of the Arabian Sea.

Move on Palace Reported

This evening, troops backed by armored personnel carriers were advancing on the Presidential Palace, according to reports sent to shipping offices in Bahrain.

There were also continuing reports, which could not be confirmed, that the President, Ali Nasser Mohammed al-Hassani, had been gravely wounded in an assassination attempt.