Forces loyal to the Saudi-backed Yemeni president flash their arms at a road on the entrance to Abyan province as they take part in an operation to drive Al-Qaeda fighters out of the southern provincial capital, on April 23, 2016 (AFP Photo/Saleh al-Obeidi)

Aden (AFP) - Yemeni troops have recaptured a key port city from Al-Qaeda militants who held it for a year, in what a Saudi-led coalition hailed Monday as a major victory in which over 800 jihadists were killed.

The assault on the southeastern city of Mukalla, home to some 200,000 people, was part of a wider counter-offensive against the Sunni extremists launched by pro-government forces last month after a year in which they had focused their firepower on Shiite Huthi rebels who control the capital.

It comes as government and rebel delegations hold peace talks in Kuwait and after US President Barack Obama during a visit to Saudi Arabia called for a negotiated settlement that would enable both sides to turn their attention on Al-Qaeda.

At the talks, which opened last Thursday, UN envoy Ismail Ould Cheikh Ahmed on Monday welcomed reports of "real improvement in the situation".

On Sunday, he had said "significant differences... remain but nonetheless there is consensus on the need to make peace".

The peace talks and Obama's visit have contributed to a change in "strategic priorities", with Al-Qaeda back at the top, according to the Soufan Group consultancy.

The jihadists' Yemen-based branch, Al-Qaeda in the Arabian Peninsula (AQAP), is regarded by Washington as their most dangerous and the group's militants have come under repeated US air and drone strikes in and around Mukalla.

Further west in Shabwa province, a US drone on Monday struck two vehicles carrying Al-Qaeda militants near the town of Azzan -- from which the jihadists have fled -- killing nine extremists, a provincial official said.

- 'No resistance' -

The jihadists have planned attacks overseas, including a January 2015 assault on French satirical magazine Charlie Hebdo that killed 12 people in Paris.

"We entered the city centre and were met by no resistance from Al-Qaeda militants who withdrew west," a military officer told AFP by telephone from Mukalla.

The officer, who requested anonymity, said residents had appealed to the jihadists to spare the city the destruction of fighting and to withdraw.

Government troops were backed by special forces from Saudi Arabia and the United Arab Emirates, as well as coalition air strikes, commanders said in a statement published by the official Saudi Press Agency.

Loyalist forces also recaptured a swathe of the adjacent Arabian Sea coast, including the city of Al-Shihr and its Mina al-Dhaba oil terminal as well as Mukalla's Riyan airport.

Troops deployed in Mukalla on Monday and set up checkpoints across the city, security officials said.

"The operation resulted... in the deaths of more than 800 Al-Qaeda members and some of their leaders, while some others fled," the coalition commanders said.

The death toll could not be independently confirmed and no indication was given of any civilian casualties.

Mukalla is one of a number of southern cities that Al-Qaeda had overrun since the Saudi-led coalition launched its military intervention in March last year when President Abedrabbo Mansour Hadi fled into exile after the Iran-backed rebels seized much of the country.

- Fragile ceasefire -

Government forces recaptured Huta, another provincial capital further west last week.

But they had to retreat from Zinjibar, the capital of Abyan province, after an Al-Qaeda car bomb killed seven soldiers and wounded 14 as they were entering the city on Sunday.

The counter-offensive against the jihadists has come as a fragile April 11 ceasefire between pro-government forces and the rebels firms up.

Washington has been waging a drone war against AQAP since November 2002, when it killed the suspected mastermind of an October 2000 bombing of a US destroyer that killed 17 sailors in the southern port of Aden.

In April last year, a US air strike killed AQAP commander Nasser bin Ali al-Ansi, who claimed responsibility for the Charlie Hebdo attack in a video, outside the presidential palace in Mukalla where the jihadists had set up base.

Last month, an air strike on an AQAP training camp in Hajr, west of Mukalla, killed more than 70 jihadists, provincial officials said.

During its year-long rule in Mukalla, AQAP imposed its strict interpretation of sharia law forbidding consumption of the mild narcotic qat, a mainstay of Yemeni social life, and demolishing the tombs of revered Sufi mystics.