Heavy fighting broke out Wednesday between government troops and a rival Islamic militia near a town where an EU envoy was meeting with Somalia's president and prime minister to press for peace talks.

A day earlier, fighting killed 10 people near a village northwest of the capital, Mogadishu, which is controlled by the Islamic militants, officials from both sides said.

Wednesday's clashes erupted in two villages nine miles from the central town of Baidoa, the seat of Somalia's beleaguered transitional government.

"Islamic militias have attacked us and the fighting is continuing," deputy Defense Minister Salad Ali Jelle told The Associated Press. He said there were casualties but could not provide figures.

Both sides used artillery, rocket-propelled grenades and anti-aircraft guns mounted on pickup trucks, local militia leader Sheik Mohamed Ibrahim Bilal said.

Somali officials said Baidoa was not threatened. Louis Michel, the European commissioner for development and aid, met with Prime Minister Ali Mohamed Gedi and President Abdullahi Yusuf and later flew to Mogadishu.

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Abdirahin Ali Mudey, spokesman for the Islamic movement, said the militia had captured the village of Daynunay on Baidoa's outskirts.

Fears of a full-blown civil war have intensified in recent weeks as the government and the rival Council of Islamic Courts dismissed efforts to schedule peace talks and threatened military action. Both sides have moved fighters, fuel and ammunition to the front lines.

Michel is trying to get the sides to stop the fighting and commit to high-level peace talks, according to an EU statement released Tuesday.

Somalia has not had an effective government since 1991. The government, backed by Ethiopian troops, holds only a small area around Baidoa. The Islamic militias have fanned out across most of southern Somalia.

The secular government, backed by the United Nations, has rejected religious rule for Somalia, while the Muslim leaders have insisted on an Islamic government.

A war in Somalia right now would be devastating, the top U.N. official for Somalia warned last week. A drought wiped out most of the country's crops and livestock in late 2005 and early 2006, while flooding since September has destroyed tens of thousands of homes and spread more misery. Add fighting to the country's problems and as many as 400,000 refugees could flee into neighboring Kenya.

Another concern has been the Islamic movement's alleged ties to international terrorists, something Islamic leaders have repeatedly denied.

Jendayi Frazer, the top U.S. diplomat for Africa, has said al-Qaida militants are operating with "great comfort" in Somalia, providing training and assistance to the Islamic militia. Somali and Ethiopian officials have said they believe men wanted in connection with the 1998 U.S. Embassy bombings in Kenya and Tanzania now hold senior command positions within the Islamic forces.

Jelle told reporters that one of the suspects in the embassy bombings, Abu Talha al Sudani, was leading the fighting near Idale, 40 miles southwest of Baidoa, where the 10 people were killed Tuesday evening.