KINSHASA (Reuters) - The massive U.N. peacekeeping effort in eastern Congo has failed to deliver a knockout blow to Rwandan rebels while local insurgents have seized new territory under its nose, United Nations experts said on Wednesday.

Far from resolving the root causes of the violence, the presence of the world's biggest peacekeeping mission has aggravated the conflict in North and South Kivu provinces, the report seen by Reuters on Wednesday said.

"Military operations have...not succeeded in neutralising the FDLR (Democratic Forces for the Liberation of Rwanda), have exacerbated the humanitarian crisis in the Kivus and have resulted in an expansion of CNDP military influence in the region," the group said, referring to Congolese Tutsi CNDP insurgents.

Congo's army, backed by the 25,000-strong U.N. force, launched an offensive against the Democratic Forces for the Liberation of Rwanda earlier this year as part of a deal to improve ties with neighbouring Rwanda, its enemy during a 1998-2003 war.

In return for Congo's pledges to stamp out the Hutu rebels, some of whom helped orchestrate Rwanda's 1994 genocide, Kigali arrested General Laurent Nkunda, whose CNDP insurgents were then integrated into the army.

While the U.N. Security Council has twice voted to continue peacekeeper support for the operations, rights groups and aid agencies have decried the displacement of more than a million villagers, thousands of rapes, and hundreds of killings.

Despite the surrender of more than 1,200 of its estimated 6,000-to-8,000 fighters, the FDLR continues to replenish its ranks through the active recruitment of both Congolese and Rwandan Hutus, the group said.

The rebels benefit from support networks in Africa, Europe and North America, as well as financing from its control of the east's lucrative tin deposits despite the army's efforts to push them out of mining areas.