TUZ KHURMATU, Iraq (Reuters) - Clashes between Kurdish and Shi’ite Turkmen paramilitary forces in northern Iraq have killed at least 10 fighters and cut a strategic road between Baghdad and the oil city of Kirkuk, security and medical sources said.

Violence in Tuz Khurmatu, 175 km (110 miles) north of the capital, has become a near monthly occurrence between the armed groups - uncomfortable allies against Islamic State since driving the jihadist militants out of towns and villages in the area in 2014.

A small explosion just before midnight near the local headquarters of two rival political parties sparked armed exchanges between the communities that spread to most neighborhoods and continued into Sunday afternoon, according to security sources.

Fighters launched mortars into densely populated areas and fired rocket-propelled grenades and heavy machine guns at the opposing positions. Shops were closed and streets deserted as plumes of black smoke rose into the sky and bursts of small arms fire pierced the air.

Unverified photos published by a Shi’ite Muslim militia group showed flames engulfing a tank on a main road.

Seven Shi’ite fighters and three members of the Kurdish peshmerga forces, including a senior commander, were killed and at least two civilians, including a child, were wounded, security and hospital sources said.

The death toll was expected to rise since snipers were preventing people from transporting casualties to hospital.

Military reinforcements were said to be gathering outside the district as high-level delegations from both sides arrived for talks to try to solve the latest dispute.

Prime Minister Haider al-Abadi called military commanders “to defuse the crisis and focus efforts against” Islamic State, which faces government forces at a front line 140 km (87 miles) away in Makhmour.

Abadi said in a statement he had directed the joint operations command to take “all necessary military measures to control the situation”.

The tensions in Tuz Khurmatu risk further fragmenting Iraq, a major OPEC oil exporter, as it struggles to contain Islamic State, the gravest security threat since a U.S.-led invasion toppled autocrat Saddam Hussein in 2003.

Efforts to push back the ultra-hardline Sunni insurgents have been complicated by sectarian and ethnic rivalries, including a contest for territory which the Shi’ite-led government in Baghdad claims but the Kurds want as part of their autonomous region in the north of the country.