ABIDJAN – Intense fighting in Ivory Coast on Wednesday threatened diplomatic efforts to end a months-old tug-of-war between rival claimants to the presidency of the world's top cocoa producer.

Heavy weapons fire echoed for a second day Wednesday in an Abidjan district controlled by forces loyal to Alassane Ouattara, the internationally recognised Ivorian leader, according to residents.

"There's constant firing (in the northern Abobo district). People are locked up in their homes," one resident said.

Another spoke of ongoing clashes with heavy weapons.

Fighting had broken out in the working-class district late Tuesday, claiming the lives of about 10 troops loyal to Laurent Gbagbo, the outgoing president who has refused to relinquish power, according to security sources.

A taxi driver said the pro-Gbagbo Defence and Security Forces (FDS) fired warning shots to urge residents stay home on Wednesday.

The FDS troops "came to ask people to stay home, not to go out," said a young man in the district. "The streets are deserted."

He said "sporadic shots" broke out in the morning and intensified later.

The Ouattara camp, allied with the New Forces former rebel group that has controlled the north of Ivory Coast since 2002, denies any involvement in Tuesday's fighting.

The surging tension comes as the African Union has stepped up efforts to break the impasse.

The presidents of Chad, Mauritania, South Africa and Tanzania, appointed by the AU, met Gbagbo and Ouattara on Monday and Tuesday in a bid to forge a binding agreement by the end of February.

Members of a high-level group led by Mauritania's Mohamed Ould Abdel Aziz have begun leaving for Nouakchott and were to arrive in the Mauritanian capital in the coming days to hammer out next steps.

The African Union has backed a peaceful resolution to the crisis, but former mediator Raila Odinga, the Kenyan prime minister, said Wednesday that force would be used if economic sanctions do not result in Gbagbo's ouster.

Odinga, whose efforts to mediate an end to the standoff failed last year, made the remarks at a news conference in Nairobi.

The Economic Community of West African States (ECOWAS) has also threatened the use of force to oust Gbagbo from the presidential palace.

Meanwhile on Tuesday Ouattara extended a ban on cocoa exports, a cornerstone of the economy, to March 15. He had ordered a one-month halt on January 24 in an attempt to choke off funding for Gbagbo.

A security source said an elite unit, the Security Operations Command Centre or CECOS, lost around 10 men in an ambush.

A high-ranking CECOS official told AFP however that the unit lost only three men while another seven suffered bullet wounds, and that the unit killed seven assailants.

Witnesses said the death toll was heavier and included many civilians. The body of a civilian killed by bullets lay in a pool of blood outside a petrol station early Wednesday.

"The assailants have taken control of the area since yesterday and killed uniformed men," one woman told AFP, balancing a bundle of belongings on her head. "I'm getting out of here."

The Gbagbo government claims that "rebels" operating in the area had killed around 10 FDS men since January and before Tuesday's fighting.

Inspired by the uprisings in Egypt and Tunisia, backers of Ouattara last week stepped up calls for a "revolution" to force Gbagbo out.

FDS forces have killed at least 10 pro-Ouattara demonstrators since Saturday when the pro-Gbagbo soldiers fired real bullets into the crowds, corroborating sources said.

Post-election violence has claimed more then 300 lives since mid-December, according to the United Nations.