Malian soldiers and separatist rebels have exchanged gunfire in the heart of the northern town of Kidal, in a dangerous escalation of violence.
It comes only days after the rebels said they were suspending their part in a peace accord signed with the government. Both sides claimed the other attacked first.
It was the first time the two sides have fought openly in a provincial capital since the announcement last week made by the National Movement for the Liberation of the Azawad, composed of ethnic Tuareg rebels. There had been reports of skirmishes in a remote area near the Mauritanian border recently, but the latest gunfire erupted outside a bank near the town's market.
An Associated Press reporter could hear the shooting in the background while talking by telephone to residents in Kidal, which has remained largely under the control of the separatists even after the return of the Malian military in June. Prior to that, the soldiers had retreated in the face of a 2012 rebellion by the ethnic Tuaregs.
"We have heard rounds of automatic gunfire and have retreated inside the house," resident Mohamed Cisse said. "It's an exchange of fire between the NMLA who came to attack the Malian soldiers who were guarding the bank."
Several hours later Mr Cisse said that relative calm had returned, although sporadic rounds of gunfire were heard.
The peace accord signed in June had allowed for the Malian army's return and also allowed for the July presidential election to proceed, the first since a March 2012 coup worsened the chaos in the long democratic West African nation.
In the aftermath, the secular Tuareg rebels and radical al Qaida-linked jihadists both took control in northern Mali. The Tuareg rebels later retreated until a French-led military intervention ousted the jihadists from the country's northern provincial capitals. The return of Malian soldiers to Kidal has been controversial.
Mossa Ag Acharatoumane, a founding member of the NMLA, claimed that Malian soldiers guarding the bank had opened fire on three unarmed members of the rebel group as they passed by.
"The town is highly tense, and we are positioning ourselves for war," he said. "It's complicated, and we are following the evolution of the situation."
But Col Diarran Kone, a spokesman for the Malian Ministry of Defence, denied that the Malian army had fired first, saying the NMLA "started to fire on our soldiers".
Hubert de Quievrecourt, a communications adviser with the French military, said the incident took place near the headquarters of the NMLA.
"We think it's an accidental explosion caused by the poor handling of an explosive device but the circumstances are not yet clear," he said. "What is certain is that no one was killed or wounded among civilians, the French army or the UN peacekeeping mission in Kidal."
On Saturday, two people were killed and seven others wounded in Timbuktu after suicide bombers blew up their vehicle near a military camp. The attack also struck near the famous Djingareyber Mosque, which is on list of Unesco World Heritage sites.
Irina Bokova, director-general of Unesco, condemned the attack, which could have heavily damaged the mosque.
"Unesco is determined more than ever to pursue the work of rehabilitating the cultural heritage of Mali and safeguarding its ancient manuscripts," she said.