Insurgents launched a fresh attack on the Malian army in the rebel bastion of Kidal on Monday, the military told AFP, in renewed fighting since the breakdown of peace talks.
The National Movement for the Liberation of Azawad (MNLA), which is fighting for autonomy in northern Mali, ambushed soldiers at a central bank, the scene of a fierce firefight on Sunday night, a senior Malian army officer told AFP.
"Our position at the bank in Kidal was attacked early this morning by MNLA troops. We responded and we have brought the situation under control," the officer said.
Panicked residents ran back into their homes in the busy downtown area as gunshots rang out around 7:00 am (0700 GMT), an aide of the regional governor Adama Kamissoko said.
"We do not know what is happening at the moment. But this is the same place as on Sunday," he told AFP.
An African military source from the UN's MINUSMA peacekeeping force in Mali told AFP around four hours later that the fighting had stopped but he was not immediately able to say if there had been injuries or deaths.
"MINUSMA has arrived and calmed the situation for the moment. MINUSMA will take control of the bank, and the Malian army has agreed to leave," he said.
"We have asked each side to go back to its own camp, including reinforcements from the Malian army and rebels who arrived in the city yesterday. The situation is calm for the moment."
The MNLA, the main Tuareg group involved in peace talks between rebels and the government which broke down on Thursday, said three of its fighters had been wounded during Sunday's gunbattle, which lasted more than an hour.
The clash followed two attacks by militants on soldiers -- one by an Al-Qaeda linked group -- since Tuareg rebels pulled out of the talks last Thursday, dealing a blow to hopes of a durable peace in the troubled west African nation.
Kamissoko's office said international troops and MINUSMA soldiers already present in the city had been deployed after the attack to protect the town hall, where the governor lives and works.
The mainly secular MNLA took control of Kidal in February after the French-led military operation ousted Al-Qaeda-linked fighters who had piggybacked on the latest Tuareg rebellion to seize most of northern Mali.
The Malian authorities reclaimed the city after signing a ceasefire deal with the MNLA but the situation has remained tense.
The MNLA accused Mali troops of "flagrant aggression", saying in a statement that its chief, who was badly injured, had been leaving his vehicle with his hands raised when the army fired.
That incident led to exchanges of fire as the rest of the unit responded, the statement added.
While the MNLA remains a largely secular cause, Mali has also suffered a series of attacks claimed by Islamist insurgents since France launched a military operation in January against Al-Qaeda-linked groups occupying the north of the country.
Four suicide bombers blew up their car at a military barracks in the desert city of Timbuktu on Saturday, killing two civilians in an attack claimed on Monday by the north African group Al-Qaeda in the Islamic Maghreb.
An AQIM spokesman praised "our brave suicide bombers" whom he said had let off "more than a ton of explosives", according to the Mauritanian Alakhbar news agency.
The spokesman said the explosion killed 16 soldiers and wounded many more, contradicting the army's statement that four suicide bombers were in the car when it exploded and two passers-by were the only people killed.