The fighting began after traders in a mainly Muslim district called PK5 took up arms to oppose taxes levied by militia groups, an imam at a local mosque said.
The death toll has risen to at least 35 in clashes between Christian militia and Muslim traders in Bangui, the capital of the Central African Republic, local media reported on Thursday.
The clashes, which erupted Tuesday in the city’s Muslim-majority PK5 neighborhood as traders took up arms to oppose taxes levied by militia groups, flared up again.
Some 35 people, including 23 neighbourhood residents, were killed while more than 50 were injured.
The number of casualties is feared to rise. Meanwhile, no official statement has been made on the deaths.
"Thirty bodies have been brought to the mosque," said Awad Al Karim, the imam of the local Ali Babolo mosque in a district called PK5 that became a haven for many Bangui Muslims at the peak of the Christian-Muslim clashes.
Bursts of automatic fire and explosions were heard on Wednesday evening and on Thursday morning, according to an AFP journalist who was in a neighbouring district.
Bili Aminou Alao, the spokesman for the UN peacekeeping force MINUSCA, said the fighting was continuing.
"We have sent a rapid response force to the area. Part of the market and some vehicles have been burned," he said.
"Between 40 and 50 shops have been burned down, as well as four or five houses," said Patrick Bidilou Niabode, head of the CAR's civil protection service.
Voluntary firefighters put out two fires which had been spreading in the market but were unable to tackle a blaze at two houses because of heavy gunfire, he added.
The CAR is one of the world's poorest and most volatile countries.
It has been gripped by sporadic violence since 2014, after its then-president, Francois Bozize, was ousted in a coup.
Fierce fighting erupted between predominantly Christian militia and Muslims, prompting the intervention of former colonial power France, under a UN mandate.
Attempts to broker a lasting peace have repeatedly broken down and most of the country lies in the hands of armed groups.
PK5 is a powderkeg district.
It became a haven for many Bangui Muslims at the peak of the Christian-Muslim clashes.