Two African Union peacekeepers were injured on Saturday when Somalia's al-Shabaab rebels attacked one of the mission's bases in Mogadishu, a spokesman for the force said.
The al Qaeda-allied insurgents are battling to overthrow Somalia's Transitional Federal Government and impose their own version of sharia law on the nation. The 9,000-strong AU peacekeeping force propping up the government and fighting al-Shabaab is made up of soldiers from Uganda and Burundi.
"al-Shabaab attacked us at the former steel factory which is beyond the Mogadishu stadium. Fighting has subsided but it is still going on," said Paddy Ankunda, the AU mission's spokesman.
He said the attack started with a suicide bombing which injured two Ugandan soldiers.
Residents in the area said they heard explosions before gunfire erupted between the two sides.
An al-Shabaab spokesman, however, said the base has fallen into rebel hands and "many" peacekeepers had been killed.
"Two of our fighters with government uniforms jumped over the wall and started fighting inside the Ugandan base," Sheikh Abdiasis Abu Musab told Reuters. "Then many fighters joined the fighting from all corners -- we killed many Ugandans. The steel factory is in our hand now."
In addition to government and AU troops, al-Shabaab is now battling regional neighbour Kenya, which has sent soldiers and heavy weapons into southern Somalia to crush the militants.
Nairobi blames the group for a string of kidnappings on Kenyan soil and frequent border incursions.