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Malian troops were battling armed Islamists in the northern city of Gao on Thursday in clashes that left the main courthouse in flames, an AFP correspondent and a military source said.
Fighting had first erupted overnight in Gao, where a military official and witnesses reported heavy gunfire around two main entrances to the main city in the north of the country.
"Our forces are currently confronting the jihadists near the Gao townhouse. They have infiltrated the city and we are currently retaliating," Amadou Diarra, a Malian army captain, told AFP in Bamako.
Troops from Niger were the first to respond to the Islamist presence in Gao overnight but by midday Thursday it was the Malian army battling what one military source said was a group of around 40 insurgents.
The source said at least three rebels had already been killed in the fighting, which involved heavy artillery fire and left the streets of Gao -- the most populous city in northern Mali -- largely deserted.
French forces wrested Gao back from the Al Qaeda-linked rebels who had controlled the city since April 2012 within two weeks of Paris' intervention in the former colony.
But Islamist rebels who redeployed on the outskirts of Gao have switched to guerrilla tactics and the city saw Mali's first ever suicide attacks two weeks ago, followed by street fighting.