Bakara market has seen frequent skirmishes
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At least 10 people have died and many have been hurt as Ethiopian forces backing the Somali government shelled Mogadishu's main market, witnesses say.
The attack was launched after mortar rounds landed on the Somali president's official residence while he was holding talks with Ethiopia's foreign minister.
No-one was injured in that attack, a presidential aide told Reuters.
Ethiopian troops intervened in Somalia in December 2006 to help government forces oust an Islamist militia.
Since then Mogadishu, the capital, has been the scene of battles with government and Ethiopian troops taking on insurgents.
Earlier this week, aid groups said that 20,000 people were being forced to flee fighting in the city each month.
Bakara market, which the government says it is a stronghold for militants, has been the site of frequent violence.
It is thought that President Abdullahi Yusuf Ahmed and Ethiopian Foreign Minister Seyoum Mesfin were discussing a plan to hold peace talks in Nairobi between the Somali government and its opponents when the attack on the residence was launched.
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