Witnesses also reported heavy machinegun fire in Sabaa Bahrat Square in the heart of Damascus.
"Machinegun fire was heard in Sabaa Bahrat Square, and members of the security forces, armed with Kalashnikovs, ran across the square," where the central bank is located, they told AFP.
Shooting was also reported in Baghdad Street, a main road near the square.
Earlier, the Observatory said rebels and troops clashed fiercely in the neighbourhoods of Al-Hajar al-Aswad and in Al-Midan, which is close to the Old City.
"The army is shelling Al-Midan hysterically; the collapsing regime has gone mad," an activist who said he was in Al-Midan told AFP via Skype.
The man, who identified himself as Abu Musab, described the shelling as "arbitrary. They have just destroyed the Ghazwat Badr mosque."
"The army has tried to storm the district, but the (rebel) Free Syrian Army has stopped them. So they have intensified their shelling. They are shelling everything."
AFP could not independently verify Abu Musab's account.