* Medvedev says battle against insurgents failing

* More than 800 dead in Jan-Nov - U.S. experts

By Denis Dyomkin

YESSENTUKI, Russia, Nov 19 (Reuters) - President Dmitry Medvedev said on Friday that Russia had failed to curb violence in the mainly Muslim North Caucasus, highlighting the Kremlin's struggle to contain a spreading Islamist insurgency. A decade after Moscow drove separatists out of power in the second of two wars in Chechnya, the North Caucasus is plagued by near daily violence, where poverty-stricken youths fueled by jihad (holy war) want to carve out a separate, Islamic state.

"We must frankly admit that it (situation) has practically not improved," Medvedev told the Kremlin's envoy to the North Caucasus, Alexander Khloponin, as well as a slew of officers from the police and the Federal Security Service (FSB), the successor to the KGB.

Medvedev named the region -- a patchwork of mostly Muslim republics along the country's southern fringe -- Russia's biggest domestic problem last year.

"The killing of civilians, spiritual leaders and law enforcement officers, shootouts and bombs are not going down in number," he said in Yessentuki, which sits at the foot of the Caucasus mountains in the Christian-majority Stavropol region.

Across the North Caucasus, 259 state agents and 112 civilians were killed in January-November of this year mostly from militant activity, according to terrorism experts at the U.S.-based Monterey Institute for International Studies in California.

The institute says up to 351 Islamist fighters were killed in the same period.

SUICIDE ATTACKS

Russia's National Anti-Terror Committee, part of the FSB, said last month that attacks in Chechnya and Ingushetia were down by nearly a half.

Medvedev blamed the police for twisting statistics on the number of attacks in the region, calling them "utter rubbish".

Multi-ethnic Dagestan on the Caspian Sea, which has a population of 2.5 million, has overtaken neighbouring Chechnya as the epicentre of violence in the insurgency.

Twin suicide bomb attacks on the Moscow metro in March, which killed 40 people, were blamed on two women from Dagestan and were considered to be the first suicide bombs carried out by non-Chechens in the Russian heartland.

After a string of scandals involving corruption and violence within the police this year, Medvedev pledged to reform the force and cut the 1.4 million staff at the Interior Ministry, which provides for the police, by 20 percent nationwide.

However critics say there has been little substantial change so far, and Medvedev admitted in July that his administration had made almost no progress in fighting corruption. (Writing and additional reporting by Amie Ferris-Rotman; Editing by Susan Fenton)