Yemeni forces announced they had retaken control of an army headquarters in the southeast, killing the Al-Qaeda gunmen holed up there and freeing troops who had been held hostage.
"The armed forces have successfully completed the assault on the headquarters of the 2nd military region at Mukalla and have thoroughly cleansed it of terrorist elements", a defence ministry source was quoted as saying by the official SABA news agency.
"All terrorists who were in the building were annihilated," the statement added.
Mukalla is the capital of the southeastern province of Hadramawt and is a major port city.
Gunmen from the Al-Qaeda-affiliated Ansar al-Sharia group seized the army HQ on Monday, after a suicide bomber rammed a car into the entrance, and took an unknown number of hostages.
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A military source told AFP that the army had fired on the building with artillery, without giving a number of casualties.
Al-Qaeda has recently intensified its attacks in southern Yemen.
On September 20, suspected Al-Qaeda fighters killed at least 56 soldiers and police in coordinated dawn attacks in neighbouring Shabwa province.
The armed Islamist network has taken advantage of the weakening of the central government since 2011, as a result of a popular uprising that toppled the then-president Ali Abdullah Saleh after 33 years in power.
Washington regards Al-Qaeda in the Arabian Peninsula as the global jihadist network's most dangerous affiliate and has stepped up its drone strikes against the group in recent weeks