Reuters International

Kurdish gunmen hold their rifles in front of the burning house of a Shi'ite militiaman during clashes in Tuz Khurmato, Iraq, April 24, 2016. REUTERS/Goran Tomasevic

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TIKRIT, Iraq (Reuters) - Clashes between Kurdish and Shi'ite Turkmen fighters in an Iraqi town late on Monday cut the main road from Baghdad to the north for the second day in a row and threatened to undermine a ceasefire agreement reached by military leaders a day earlier.

The violence in Tuz Khurmatu, 175 km (110 miles) north of the capital, is the latest and most severe flare-up of tensions that have been brewing since Islamic State militants were driven back from the town in 2014.

Shi'ite paramilitary leaders and Kurdish peshmerga commanders had brokered a truce on Sunday to end fighting that killed at least 12 people on both sides, but it broke down before sunset on Monday.

Police sources in the town said shops were closed and the streets deserted. No casualties were reported at area hospitals, likely because the roads were considered too dangerous for travel.

Peshmerga tanks shelled Shi'ite Turkmen districts, while Shi'ite fighters launched mortar fire and sniped at predominately Kurdish areas, the police said. Five buildings in Shi'ite neighbourhoods had been burned.

A Kurdish peshmerga fighter in Tuz Khurmato told Reuters his forces had been instructed to observe the ceasefire, but that armed Kurdish residents of the town were attacking Shi'ite Turkmen positions.

"Now you can hear the sound of RPG (rocket-propelled grenades) and rockets," he said, the sound of small arms fire audible in the background.

The clashes began late on Saturday when members of a Shi'ite militia hurled a grenade into the house of a Kurdish commander and his guards responded by firing RPGs, security sources said.

The tensions in Tuz Khurmatu risk further fragmenting Iraq, a major OPEC oil exporter, as it struggles to contain Islamic State, the gravest security threat since a U.S.-led invasion toppled autocrat Saddam Hussein in 2003.

Efforts to push back the ultra-hardline Sunni insurgents have been complicated by sectarian and ethnic rivalries, including a contest for territory which the Shi'ite-led government in Baghdad claims but the Kurds want as part of their autonomous region in the north of the country.

(Reporting by Ghazwan Hassan and Isabel Coles in Erbil)

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