Lebanese troops clashed with gunmen Thursday in a mainly Sunni Muslim area near the Syrian border where there was deadly fighting with rebels from over the frontier in early August.
Hundreds of terrified civilians fled the town of Aarsal, a mainly Sunni enclave within Lebanon's largely Shiite Bekaa Valley which is hosting tens of thousands of Sunni refugees from Syria.
The fighting was still raging in late afternoon, with troops shelling the gunmen who had taken up positions on the outskirts of Aarsal, an AFP correspondent reported.
The military said in a statement that the fighting erupted when an army vehicle with five soldiers on board was ambushed at around 11:00 am (0800 GMT).
The army launched a counter-attack in which one of the soldiers was wounded while another went missing, it said.
"A vehicle belonging to the terrorists and equipped with a 23 mm anti-aircraft gun was destroyed," the army said, reporting "dead and wounded" among the assailants.
The army dispatched reinforcements to the area around Aarsal.
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The AFP correspondent saw a wounded soldier being evacuated in a military vehicle as plumes of black smoke billowed into the sky over the town.
Earlier a security official said the fighting started with an assault on an army checkpoint at dawn and rapidly escalated with the army responding with artillery fire and Grad missiles.
The area's inhabitants are overwhelmingly sympathetic to the Sunni-dominated uprising against Syrian President Bashar al-Assad's regime and is widely suspected of smuggling weapons and fighters across the border.
Troops clashed with Syrian rebels in the area on August 2 after the army detained a leading jihadist.
Several days of fighting killed 19 soldiers, 16 civilians and dozens of jihadists.
It ended with a truce negotiated by Lebanese Sunni clerics, but the jihadists withdrew from the area taking 24 police and soldiers hostage.
Al-Qaeda affiliate Al-Nusra Front has demanded that Lebanon's Shiite militant group Hezbollah end its intervention in Syria in support of Assad's forces as a condition for their release.