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The fighting took place on the western outskirts Abyan's provincial capital city of Zinjibar, some 480 km south of the capital Sanaa.
A spokesman of the al-Qaida in the Arabian Peninsula (AQAP) in Abyan, known locally as Ansar al-Sharia, confirmed in a text message that two militants were killed in overnight battles and around 10 others were seriously wounded.
The AQAP which allegedly have 12,000 fighters in south Yemen took advantage of the anti-government protests that have been rattling the impoverished Arab country since late January 2011 to increase its presence in the southern provinces.
The resurgent terrorist group seized Zinjibar in May 2011, and then took control over other neighboring towns including al-Koud and Jaar, as well as Azzan city in the southeastern province of Shabwa.
The Yemeni government forces supported by the U.S. and Saudi intelligence have been combating the terrorist group since 2009.
The fresh battles came four days after the AQAP said in a statement obtained by Xinhua that it agreed to start negotiations offered by the Yemeni government to reach a ceasefire deal in Abyan.
However, security officials in Abyan said Tuesday that mediation in Jaar city to reach a truce has apparently failed because of the unreasonable conditions laid down by al-Qaida group.
Al-Qaida's conditions included a complete withdrawal of the government troops from Abyan, compensation to displaced people, reconstruction of Abyan's cities, and that Ansar al-Sharia will take responsibility of the province's police and judiciary affairs.
Last week, Yemen's acting President Abd-Rabbu Mansour Hadi, the sole presidential candidate nominated by Saleh's ruling party and the opposition coalition for the Feb. 21 polls, pledged that his government "will continue battles against terrorist groups to eliminate them with all possible means."
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