Rwandan and Congolese troops traded heavy weapons fire around 1130 IST, said one witness.
"There were heavy arms fire explosions, rockets," the resident told AFP on condition of anonymity.
A senior Congolese military officer said that Rwandan troops "attacked our positions."
A Rwandan military source, also speaking anonymously, told AFP that there had "not been serious clashes, they were sporadic firings" of heavy weapons.
The fighting came a day after the two sides exchanged gunfire yesterday, with each blaming the other for the outbreak of violence.
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The two country have long been at odds, with Rwanda repeatedly accused by the United Nations and its neighbour of backing a rebellion by the M23 rebel group that temporarily seized control of parts of eastern DRC.
Rwanda last year accused the Congolese army of firing rockets and mortar shells on its territory, and massed troops along its border in response.
There are fears the latest violence could undermine international efforts to bring stability to the DRC's lawless east after years of bloody conflict.
The conflict is fuelled by the east's wealth of mineral reserves - particularly gold and minerals used in electronic products.
Yesterday's clashes took place around 20 kilometres northeast of Goma, capital of troubled North Kivu province, where rebels from a Hutu group linked to the 1994 Rwandan genocide began surrendering last month.
The FDLR has around 1,500 men, according to UN estimates, or 4,000, according to Kigali. They have been accused of widespread violence and rights abuses in the DRC.