Al-Shabaab rebels attacked Ethiopian troops in southern Somalia on Saturday and dozens were killed in hours of fighting, residents, regional officials and the Islamist rebels said.
There were differing accounts of which side bore the brunt of the fighting in the small town of Yurkud, the worst involving Ethiopian troops since they returned in force to Somalia last year after withdrawing in early 2009.
The fighting came the day after the African Union said Ethiopia planned to pull its troops out of the Horn of Africa nation by the end of April with soldiers from Djibouti, Uganda and Burundi taking their positions.
The governor of Bay region in Somalia, Abdifatah Mohamed Ibrahim Gesey, told Reuters that 130 Al-Shabaab fighters were killed, with minimal loses on the government and Ethiopian side, after the rebels tried twice to seize Yurkud.
Al Shabaab's spokesman for military operations, Sheikh Abdiasis Abu Musab, told Reuters its forces had killed 73 Ethiopian soldiers, captured two along with many weapons, and lost 5 of its fighters before the Ethiopians fled.
A spokesman for Ethiopia's foreign ministry said he would comment on the reports later on Saturday.
Residents of Yurkud told Reuters that dozens of bodies from both sides littered the streets and that Ethiopian soldiers remained in control after the fierce fighting.
It is difficult to get accurate accounts of casualties from clashes in Somalia as all sides tend to exaggerate their successes and underplay their losses.
"At about 6 a.m. Al-Shabaab attacked Yurkud. A fierce battle with the Ethiopians continued for hours. Ethiopian troops now control the town," said 56-year-old resident Halima Aden.
"Parts of the town have been destroyed. Some residents fled and others are hiding in the houses," she said, adding that bodies from all sides littered the streets.
Troops from Ethiopia crossed the border in November to open up a third front against the militants, who are also fighting 9,000 Ugandan and Burundian troops under the African Union Mission in Somalia (AMISOM) and Kenyan forces to the south.
Ethiopian forces captured the rebel stronghold of Baidoa, also the former seat of Somalia's parliament, last month having seized Baladwayne from the Al-Qaeda-allied Al-Shabaab group on New Year's Eve.
Keen to point out their incursion is not a repeat of their ill-fated 2006-2009 war in Somalia, Ethiopian officials have said troops would only be deployed for a brief period.