The Sahwa Net opposition news website said police had cordoned off a building in the flashpoint Abyan province in south Yemen where the wanted gunmen were located.

Fighting broke out and two policewomen who entered the building to evacuate families inside were taken hostage. At least one person was killed and two others wounded.

The gunmen eventually escaped, leaving the captured policewomen inside the building, Sahwa reported.

North and South Yemen formally united in 1990 but many in the south, where most of impoverished Yemen's oil facilities are located, complain northerners have used unification to seize resources and discriminate against them.

Yemen became a Western security concern after the Yemen-based regional arm of Al-Qaeda claimed responsibility for a failed attempt to bomb a US-bound plane in December.

Western allies and neighboring oil exporter Saudi Arabia fear Al-Qaeda is exploiting Yemen's instability to recruit and train militants for attacks in the region and beyond.

In addition to its struggle with the separatists, Yemen is battling Shiite rebels in the north. It sealed a truce with the rebels in February but analysts say it is only a matter of time before fighting starts again as grievances have not been adequately addressed.