A witness said earlier that a car bomb had exploded at a base of hundreds of Ethiopian soldiers on the outskirts of the Somali capital.
Ahmed Mohamed Shardi, who was driving a minibus, saw a car behind his vehicle pull into the Ethiopian army base, about 30 miles south of Mogadishu, and then explode.
"Big smoke has covered the area," Shardi told The Associated Press by phone. "I and all the passengers have panicked. We did not know where to go."
The base is surrounded by a low wall and its entrance is ungated. A large building inside used to serve the Somali military before the country spiraled into 15 years of anarchy. Ten pickups mounted with machine-guns are usually parked inside, and the base is equipped with artillery.
Meanwhile, fighting between Ethiopian troops and insurgents left at least 12 people dead in Somalia's capital Thursday, while an Ethiopian military truck exploded on the outskirts of the city, possibly killing the soldiers on board, witnesses said.
Businessman Ahmed Warsame said he heard mortar shells hit in his southwestern Mogadishu neighborhood and went out to see if anyone needed help, finding eight bodies lying in the street. Their belongings were strewn about, suggesting they had been trying to flee the capital, he told The Associated Press by phone.
Abdillahi Hassan Ali, a university student, said mortar shells struck houses near his northern Mogadishu neighborhood. He said he found four bodies in one house.
Another resident of the neighborhood, Safya Muse, said Ethiopian soldiers set up a base Thursday at a street junction near her home. The area, called Kungal, is a known insurgent base.
Fighting in Mogadishu has killed hundreds of people since Ethiopian forces helped Somalia's fragile interim government oust an Islamic militia in December. Remnants of the Islamic group have vowed to wage an Iraq-style insurgency.
More than 200,000 people have fled Mogadishu since February, the U.N. refugee agency said.
Also on Thursday, a witness said he heard an Ethiopian truck explode after it passed his small pharmacy about 12 miles from the capital. The truck was one of two carrying Ethiopian soldiers traveling on the main road to towns in southern Somalia, he said.
Yusuf Osman said on the phone that he saw the trucks leaving and "within minutes we heard a blast and saw one of the cars burning ... I think all the soldiers were killed as the whole car was on fire."
Ali Hussein Mohamed, a street vendor, told The Associated Press by phone that he saw 10 injured Ethiopian soldiers lying on the ground.
Osman said soldiers in the second truck opened fire on a nearby minibus after the blast. He saw two injured people, but did not know if anyone was killed.
Policemen from a nearby station then cordoned off the area, Osman said.
It was not clear what caused the explosion. Neither government nor police officials were immediately available for comment.
Thursday's fighting in Mogadishu broke a one-day lull that had followed two days of street battles described by some residents as the most intense in years. Ethiopian troops and insurgents fired tanks, mortars and rocket-propelled grenades, leaving at least 14 people dead.
Diplomats have said that clan militias, not necessarily linked to the Islamic insurgents, have also been involved in Mogadishu's fighting.
Somalia has not had an effective national government since 1991, when warlords overthrew dictator Mohamed Siad Barre and then turned on one another, throwing the country into anarchy.
The transitional government was formed in 2004 with U.N. help, but has struggled to extend its control over the country.