Authorities shut down the country's main airport, fearing wider unrest and an Associated Press journalist heard heavy gunfire in the Khor Maksar district, as thick black smoke rose in the sky after an airstrike.
The fighting spread to other districts, including areas near the presidential palace. Witnesses say that armed men stormed government offices and riddled the pictures of president's with bullets.
A second official told the AP that the UAE was behind the assault.
Witnesses said residents were fleeing the area. Schools and universities were shut down and students were told to stay home. A medical official said at least eight people were killed and 80 others wounded. All spoke on condition of anonymity because they feared reprisals.
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Doctors Without Borders said that its hospital received four dead and over 80 others wounded from the clashes. Airport authorities ordered the evacuation of all planes, fearing they could be damaged in the fighting. State-run carrier Yemenia cancelled all flights to and from Aden.
The UAE is a key member of the Saudi-led coalition allied with Hadi's government, but has had tense relations with the president.
Forces known as the Security Belt, who have been trained and armed by the UAE, and those under the command of former Aden governor Aidarous al-Zubaidi, along with others led the fighting against Hadi's forces.
On Saturday, the coalition issued a statement calling for "self-restraint" and described the protests as "popular demands to fix government flaws."
Hadi supporters blame the coalition, saying it has failed to fulfill promises to rebuild Aden while barring the president, his sons and top commanders from returning to the country.
The tug-of-war between UAE and Hadi has fractured the coalition and contributed to the nearly three-year stalemated war with the Houthis, who control the capital, Sanaa, and much of northern Yemen.
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