Residents said at least three Yemeni policemen had been killed and five wounded. But a government source in Sanaa said only two members of the security forces had died.
He said the gunbattle took place when security forces tried to arrest an arms dealer suspected of supplying the separatists, and that four other people had been killed, including a man suspected of links to Al-Qaeda named as Ali Al-Yafie.
Last week a policeman was shot dead in an ambush in the south, and on Sunday crowds protested in the southern provinces of Abyan, Dalea and Aden against the arrest of 21 people accused of rioting. Many carried the flag of the former South Yemen.
North and South Yemen united under Saleh's presidency in 1990 but many in the south, home to most Yemeni oil facilities, complain that northerners have abused unification to grab resources and discriminate against them.
Yemen's government struck a truce on Feb. 11 with rebels who they had been fighting in the north, allowing them to turn their attention to the rebellion in the south as well as Al-Qaeda militancy.
Yemen rose to the forefront of Western security concerns after the Yemeni arm of Al-Qaeda claimed responsibility for a failed attempt to bomb a US-bound plane in December.
