Ethiopian forces have exchanged fire with Islamists in a strategic town north of Somalia's capital, officials of the powerful Islamic movement say.
The rally in the capital back calls for holy war or jihad against Ethiopia
The Union of Islamic Courts chairman Sheikh Sharif Sheikh Ahmed told a rally in Mogadishu that Ethiopian forces began shelling Bandiradley at 0300 GMT.
Earlier this month, Islamists captured the town near semi-autonomous Puntland, which has strong ties to Ethiopia.
There is no independent confirmation of the fighting and no Ethiopian reaction.
Last week, Ethiopian Prime Minister Meles Zenawi said the Islamists represented a "clear threat" to his country which he said was prepared for conflict following repeated Islamist calls for a holy war.
The UIC, which is backed by Ethiopia's rival, Eritrea, and now controls much of southern Somalia, has denied claims by Ethiopia and the weak Somali transitional government that it has links to al-Qaeda.
The UIC chairman told the rally that Ethiopian soldiers had massed around Bandiradley and started firing missiles.
"Their tanks are trying to surround the area and now they are about 10km (six miles) away from the town where our fighters are based," he said.
"We will never accept surrender to Meles, we are devoted to our religion and will fight until we die. That is our promise."
The rally was held to condemn United States support for the deployment of a regional peacekeeping force in Somalia.
The US is expected to propose a United Nations Security Council resolution this week calling for African Union peacekeepers to support the interim government, and for the partial lifting of the international arms embargo on Somalia.
A Brussels-based think-tank, the International Crisis Group, warned that this move could easily trigger a regional conflict.
It says that the UN Security Council - rather than back one side in Somalia over the other - should apply equal pressure on the transitional government and the UIC to resume political negotiations.
Another Islamic official at the rally told the crowd they would invite foreign fighters into Somalia to fight alongside them if the UN resolution was passed.
Ethiopia denies having thousands of troops backing government forces in Somalia, but has admitted to having hundreds of military trainers there.
Eritrea equally denies claims that it has sent troops and weapons to the UIC.
Somalia's interim government only controls a small patch of territory around the town of Baidoa.
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