An al Qaeda group tightened its grip on a Yemeni coastal town while in the capital Sanaa a truce was holding between President Ali Abdullah Saleh's forces and armed rebels, hours after it was agreed.
Armed men believed to be from al Qaeda appeared to have full control of the coastal city of Zinjibar in the flashpoint province of Abyan.
"About 300 Islamic militants and al Qaeda men came into Zinjibar and took over everything on Friday," a resident said. The army had withdrawn from Zinjibar after a battle with militants in March, but later regained control.
Opposition groups have accused Saleh of using the al Qaeda threat to win aid from regional powers seeking his government's help in battling the militants. The groups have said they could do a better job of containing al Qaeda than the president.
In Sanaa, pedestrians and cars returned to streets where pitched battles during nearly a week of fighting killed at least 115 people.
The violence heightened fears that the country perched beside a vital oil shipping lane might descend into civil war.
The latest violence, pitting Saleh's forces against members of the powerful Hashed tribe led by Sadeq al-Ahmar, was the bloodiest since pro-democracy unrest erupted in January and was sparked by Saleh's refusal to sign a power transfer deal.
The ceasefire deal included a withdrawal of armed tribesmen from government buildings and moves to normalize life in the Hasaba district of Sanaa, where fighting with machineguns, rocket-propelled grenades and mortars prompted thousands of residents to flee the city.
Despite the truce, analysts are concerned fighting could flare again, given the animosity between the groups and growing popular anger at Saleh for not ending his nearly 33-year-long rule which has brought Yemen to the brink of financial ruin.
The truce extends to areas outside of Sanaa where tribesmen have clashed with the president's Republican Guards and air force fighters have strafed armed tribesman with bombs.