Malian troops were battling armed Islamists in the northern city of Gao on Thursday in clashes that left the main courthouse in flames, an Agence France Presse correspondent and a military source said.

Fighting had first erupted overnight in Gao, where a military official and witnesses reported heavy gunfire around two main entrances to the main city in the north of the country.

At least two civilians were wounded on Thursday in an apparent car bombing near a military camp housing French and Chadian troops in restive northern Mali, local officials and security sources told Agence France Presse.

The vehicle "exploded around 500 meters (yards) from the camp occupied by the French and the Chadians," a local official said, with a security source confirming the information.

The German government said Tuesday it had approved sending up to 330 soldiers to help train the Malian army and support the French deployment in its battle against Islamists.

Up to 180 German soldiers have been earmarked for the European Union Training Mission (EUTM), formally approved by EU foreign ministers in Brussels on Monday.

The United States is likely to play a more active military role in Mali, where French-led forces are battling Islamist rebels, after the country holds elections, the chair of a key Senate sub-committee said Monday.

Washington has been providing intelligence, transport and mid-air refuelling to France, which launched its intervention last month, but cannot work directly with the Malian army until a democratically elected government replaces current leaders who came to power after a coup, said Christopher Coons, chair of the Senate foreign relations committee's Africa sub-committee.

European Union foreign ministers on Monday formally approved the launch of a 500-strong EU military mission to train the Malian army, which has already begun work on the ground.

A first group of 70 EU military arrived in the west African nation 10 days ago, and Monday's ministerial greenlight was the final phase in setting up the European Union Training Mission (EUTM), which has a 15-month mandate to shape up the ramnshackle Malian army.

An elite army unit loyal to Mali's ousted president that has clashed repeatedly with rival units since his ouster will be dispersed by March, the crisis-torn country's government said Friday.

Most "Red Beret" paratroopers have refused to obey an order absorbing them into other units to fight Islamist rebels who seized northern Mali in the wake of a coup in March last year.

The U.N. food agency said Friday it aims to provide half a million Malians with emergency food aid this year, especially in the restive north, as a survey showed that nearly all those who have fled the area hope to return home soon.

The U.N. World Food Program aims "to reach around 564,000 people in Mali, (including) more than 400,000 crisis-affected people in the north in Timbuktu, Gao and Kidal in need of assistance," spokeswoman Elisabeth Byrs told reporters in Geneva.

The European Union on Friday announced fresh aid worth 20 million euros to help restore law and order in Mali as well as the return of basic state services such as education after months of trouble.

The aid comes on top of a quarter-billion-euro EU package to also be released as authorities move to restore democracy in the beleaguered west African nation.

The United States has designated an alleged senior North African al-Qaida leader a "terrorist" as part of Washington's support of French-led troops who wrested northern Mali back from Muslim extremists.

The U.S. Treasury on Thursday targeted Yahya Abu Hammam, an alleged senior leader in al-Qaida in the Islamic Maghreb (AQIM) with an executive order used to designate "terrorists and their supporters."

UNESCO chief Irina Bokova warned Thursday that ancient manuscripts from Timbuktu are at risk of being trafficked out of Mali and pledged to help restore the fabled city's heritage damaged by radical Islamists.

Al-Qaida-linked rebels who seized control of Timbuktu last year caused a global outcry by destroying ancient Muslim saints' shrines they considered idolatrous and burning priceless manuscripts before a French-led military campaign reclaimed the city on January 28.