The conflict, which flared on February 9 when ethnic Kokang rebels killed nearly 50 soldiers during a series of attacks on Laukkai town, has seen at least 30,000 people flee into China, prompting Beijing to call for an end to the clashes.
A similar number of people are believed to be displaced within Myanmar's northern Shan State, but clear estimates are hard to glean as local aid groups have limited operations after a Myanmar Red Cross convoy came under fire.
"Army columns were in hot pursuit of Kokang insurgents into retreat," around the Laukkai area, state mouthpiece the Global New Light of Myanmar reported today.
The report said the bodies of two rebels were recovered by Myanmar soldiers after fighting early Thursday to secure roads leading to Laukkai, which is now an apparent ghost town.
Rebels say they have also inflicted casualties on the army over recent days.
The conflict has renewed doubts over a government attempt to forge a nationwide ceasefire in a country peppered with bitter ethnic insurgencies.
They have been joined by other nearby rebel groups, including the Ta'ang National Liberation Army and the powerful Kachin Independence Army, an ominous sign for peace in the country as it opens up and heads towards a crunch general election later this year.
Civilians have continued to stream into the Shan town of Lashio, some 140 kilometres from the fighting.
"We left yesterday morning because we were scared," a tired, sunburnt 50-year-old woman taking shelter at a Lashio monastery told AFP today.
Today around 500 people were camped at the monastery where thousands who have fled the violence, many of them temporary workers, have taken refuge before travelling on to their homes in other parts of Myanmar.
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