A few hours after the ceasefire took effect at midday (0900 GMT), fighting still raged around the flashpoint southwestern city, where violence has killed dozens this week, despite clashes subsiding on several fronts.
Clashes were heaviest in the town of Salo, southeast of Taez, military sources said, reporting casualties on both sides.
Inside Taez itself, rebel rocket fired into a residential district killed one civilian and wounded two, the sources added.
Intermittent fighting was also reported in Nahm near the capital Sanaa, in Shabwa in the south and Sarwah to the east.
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At first the government, which has deep reservations about a UN peace blueprint it believes undermines its authority, rejected the peace bid before later agreeing to observe it.
Yemen's government has come under huge pressure to back down in the face of an international outcry over the mounting civilian death toll from 20 months of conflict.
"There are international pressures to observe a ceasefire and to resume (peace) negotiations," a source close to the presidency told AFP, requesting anonymity.
More than 7,000 people have been killed in Yemen and nearly 37,000 wounded since the coalition intervention began in March last year, the United Nations says.
"We really hope that the war will end. All Yemenis are very tired of the conflict," said Khaled al-Waysi, a resident of Sanaa.
Another resident, Sadeq Juhaifi, said: "We want one of the parties to be courageous enough to announce long-term peace, not just a two or one-day ceasefire."
A spokesman for forces allied to the Iran-backed Shiite Huthi rebels, Brigadier General Sharaf Luqman, confirmed that they would also abide by the ceasefire.
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