Fighting broke out in the town of Kidal in Mali's desert north on Thursday between pro-government militia fighters and Tuareg rebels, a town resident and a fighter said.
"Everyone is hiding inside. We are hearing the sounds of gunfire. There's small arms and heavy weapons fire," one resident told Reuters, asking not to be named out of fear of reprisals.
Tensions have been building for several days in Kidal, one of northern Mali's main towns, between the Tuareg-dominated Coordination of Azawad Movements (CMA) and rival Gatia militia fighters, leading to sporadic clashes.
A peace agreement signed last year by the government, its militia allies and the Tuareg separatists was intended to ease tensions between armed groups in the north and allow the army to concentrate on fighting Islamist militants.
However the deal is fraying.
The government of neighbouring Niger attempted to mediate between the groups in Kidal, and representatives of the pro-Bamako militia and the rebels signed a truce on Sunday.