Islamist insurgents fired mortars at the presidential palace from positions in the Bakara market, reports a BBC correspondent in the city.

Government troops and their Ethiopian allies responded and a shell landed in a busy part of the market.

Meanwhile, a landmine has killed a UN driver in the southern port of Merca.

An Italian and a Somali official who were also in the vehicle are being treated for their injuries, which are not life-threatening, a local doctor said.

The attack comes as the UN has started to pull out its foreign staff from the town of Baidoa.

Ghost city wracked by war Video: In Somalia's danger zone

UN sources have told the BBC they are leaving the town, where Somalia's parliament is based, because of fears that the violence in Mogadishu could spread.

Baidoa, a strategic town on the main road from Mogadishu to Ethiopia, is one of the few parts of Somalia under government control, correspondents say.

Seventeen years of fighting in Somalia has left more than three million people - almost half the population - needing food aid, according to the World Food Programme.

"The situation is appalling and it is worsening with this growing insecurity," WFO spokesman Peter Smerdon told the BBC.

The latest deaths come after a coalition of 52 aid agencies issued a statement saying the international community had "completely failed Somali civilians".

The aid groups estimated that almost 40,000 people had been displaced from Mogadishu in the last few weeks, with 1.1 million uprooted in the last nine months.

Human Right Watch said Somalia was the most ignored tragedy in the world today.

BBC