Area residents said pro-government forces and Islamic militia, which sought the withdrawal, exchanged mortar fire at Daynunay, near Baidoa, the BBC said Wednesday.
Both sides promised a European Union envoy they would resume talks, but observers said they fear the conflict will plunge the region into a crisis.
Louis Michel, the EU's development commissioner, met government officials in Baidoa before heading to the capital, Mogadishu, to conduct talks with Union of Islamic Court leaders. The Islamists have refused to negotiate with transitional government leaders until Ethiopian troops leave Somalia.
Islamist spokesman Abdirahin Ali Mudey says the interim government's base is in UIC hands.
Meanwhile, clashes broke out in Moode Moode, a village off the Daynunay-Burhakaba road, the report said. Heavy fighting and at least one death were reported near Idale, about 37 south of Baidoa, after skirmishes Tuesday evening.