MOGADISHU, 28 June 2004 (Reuters) - At least two people, including the mayor of the northern Somali port town of Bosaso, were shot dead by gunmen on Monday, residents said, further destabilising security in the breakaway enclave of Puntland.

The masked gunmen also shot and injured three other people believed to be aides of Bosaso Mayor Mohamed Said Sayruq, hospital officials said.

"There is tension in the town. We are fearing retaliatory attacks any time now," said one resident who witnessed the shootings outside the town's crowded market.

He and other residents of Bosaso attributed the killings to increasing political rivalries among various militias in Puntland, triggered by a decision of the enclave's parliament to dissolve its cabinet. Some ministers opposed the decision last week.

Somalia collapsed into chaos in 1991 after the ouster of military ruler Mohamed Siad Barre.

Leaders of Puntland and rival groups have been holding stop-start peace talks in neighbouring Kenya in a bid to end more than a decade of anarchy in the country.

Puntland lies in the north of the war-torn Horn of Africa country. Officials said Puntland's leader, Abdullahi Yusuf, had returned to Somalia from the Kenyan peace talks to try and solve the political crisis.

East African regional governments have warned militiamen to end their fighting in Somalia to avoid undermining the final stages of the country's peace process.