Bamako - Islamists in Mali have retaken the northern town of Douentza, disarming without a fight a local militia trying to wrest back control of the rebel-held north, fighters on both sides said on Sunday.
A mix of Islamists control the northern two-thirds of Mali, having hijacked a rebellion initially launched in January by secular Tuareg rebels seeking independence.
Meanwhile, regional military powerhouse Algeria said it was checking reports of the execution of one of its diplomats held by the same Islamist group, MUJWA, which has strong links with al Qaeda in the region.
The hostage crisis and fall of Douentza, 800 kilometres northeast of the capital Bamako, illustrate the challenges Mali's government and countries in the region face in securing a deal with or defeating Islamists occupying the desert north.
Oumar Ould Hamaha, a senior Islamist speaking on behalf of MUJWA, said they took control of the town after fighters of the Ganda Izo militia missed a deadline to disarm.
"Our men came to disarm all those who are armed ... Our aim is not to go as far as Bamako," he said.
Ibrahim Maiga, a Ganda Izo leader, confirmed his men had been overpowered without a fight and blamed the rout on a defection in their ranks.
Mali's army has been in tatters since its hierarchy crumbled during a coup to oust the country's president in March. Efforts to tackle the crisis have also been complicated by gunmen shifting from one group to the other and the Islamists' holding a number of hostages.
ANI, a Mauritanian news agency that follows security issues, reported it had received a statement from MUJWA saying it had killed one of four diplomats it held as Algeria had not met a deadline for demands it set.
However, the news agency also issued a contradictory report in French saying the deadline had been extended.
Algeria's foreign ministry issued a statement on Sunday saying that the statements "were being studied to check their authenticity".
MUJWA was not immediately available to confirm the report.
Algeria has by far the region's biggest armed forces and has been critical of Mali's handling of the Islamist threat in recent years but, so far, Algiers has been reluctant to intervene outside its borders.
Mali's army said it removed President Amadou Toumani Toure partly over his handling of the northern rebellion. But since they came to power they have been accused of meddling in politics rather than preparing a counterattack.
West Africa's regional bloc ECOWAS also wants to deploy troops to Mali, but planning has dragged on for months due to the lack of funds and disagreement over what the mission should be.
As a result, local hopes have been pinned on ragtag local militia like the Ganda Izo, which have been recruiting and training local youth but lack weapons and basic equipment.