Armenian and Azerbaijani forces exchanged rocket fire as fighting intensified over Nagorno-Karabakh yesterday, with the breakaway region's capital and Azerbaijan's second-largest city bombarded. 

Yerevan said Nagorno-Karabakh's main city Stepanakert, which has been under artillery fire since Friday, was hit again yesterday and AFP journalists said there were regular explosions and smoke rising in parts of the city.

Azerbaijan's defence ministry said Ganja, a city of more than 330,000 in western Azerbaijan, was also "under fire" while separatist forces claimed to have destroyed an airbase there.

The two sides accused each other of targeting civilian areas, as the conflict appeared to be widening a week after heavy fighting broke out in the decades-old dispute over Karabakh. The clashes has killed more than 350 people on both sides.

Armenia and Azerbaijan have resisted international calls for a ceasefire and clashes have intensified in recent days, with both sides claiming victories on the front and saying they are inflicting heavy losses.

Sirens were sounding and explosions were heard at regular intervals in Stepanakert, where residents were taking shelter in basements. Armenia's foreign ministry said Stepanakert and the town of Martakert were under rocket attack.

Azerbaijan said Ganja was under fire, including from areas outside of Karabakh. It said Armenian forces had also used heavy artillery and rockets against the towns of Terter and Goradiz in Azerbaijan.

Karabakh's separatist forces said they had targeted and destroyed an airbase in Ganja, while the region's leader, Arayik Harutyunyan, warned that it would now consider "military facilities in Azerbaijan's big cities" as legitimate targets.

Karabakh's declaration of independence from Azerbaijan during the collapse of the Soviet Union sparked a war in the early 1990s that claimed 30,000 lives.

Talks to resolve the conflict have made little progress since a 1994 ceasefire agreement.

The breakaway province is not acknowledged as independent by any country, including Armenia.

Yerevan has accused Turkey of dispatching mercenaries from Syria and Libya to the fighting -- an allegation confirmed and denounced by Russia and France.