Ethiopian government forces closed in on the capital of the northern rebel stronghold of Tigray on Friday, residents and a diplomat said, as fears grew that fighting could spill into a wider war after Ethiopia and Eritrea cut diplomatic ties. 

Banks and shops in the city, Mekelle, were closed with the Ethiopian National Defence Force and allied militiamen reported to be within striking distance, two residents, who asked not to be named for security reasons, told Reuters.  

Pro-government forces have made quick advances into Tigray since combat erupted last week with a rebel alliance led by the region's ruling party, the Tigray People's Liberation Front, in the worst escalation of violence since a 2020-2022 civil war.

But suspected drone attacks on the Ethiopian capital, Addis Ababa, earlier this week suggested the TPLF and its allies might have better striking capability than previously thought.

Spokespeople for Ethiopia's military and government did not respond to requests for comment on the reported advance or suspected attacks on Addis Ababa.

ETHIOPIA CLOSES EMBASSY IN ERITREA

Analysts fear the current conflict could spread beyond Ethiopia's borders in an increasingly fragile territory where regional powers are competing for influence. Tigray has Ethiopia's longtime foe Eritrea to its north, and Sudan — caught up in a more than three-year-old civil war — to its west.

Ethiopia's government has accused Eritrea, Sudan and Egypt of supporting the opposition alliance - an allegation they have all denied.

On Thursday, Ethiopia said it was closing its embassy in Eritrea "in response to Eritrea's direct and indirect acts of hostility and belligerence" and ordered 10 Eritrean diplomats to leave Ethiopia within 48 hours. 

Eritrea responded by severing all diplomatic ties with Ethiopia. The two countries fought a border war from 1998-2000 and only restored diplomatic relations in 2018.

Eritrea fought alongside Ethiopia's federal government against the TPLF during the 2020-2022 war, in which hundreds of thousands of people were killed. Relations have since soured, in part over landlocked Ethiopia's public insistence that sea access is vital for its security and economy.

Eritrea says it fears Ethiopia will try to take its Assab port by force. Ethiopia's Prime Minister Abiy Ahmed has said Ethiopia intends to secure sea access through peaceful means.  

TPLF THREATENS COUNTER-ATTACK

The federal forces and allied militiamen captured a town about 75 km south of Mekelle, the pro-government Tigray Peace Forces militia said on Thursday. One of the Mekelle residents said they were now within 30 km. 

TPLF chairperson Debretsion Gebremichael acknowledged on Thursday that federal forces had occupied some parts of the region but said his forces would counter-attack "in due course". 

"We should ensure that Tigray is their graveyard, not their playground," he said in a statement. 

On Thursday, Ethiopia's foreign ministry also expelled an Egyptian diplomat, prompting Cairo to respond in kind by expelling an Ethiopian embassy counsellor. 

In a statement, the African Union Commission urged Ethiopia, Eritrea and Egypt to exercise "maximum restraint".

EXPLOSIONS HEARD IN ETHIOPIAN CAPITAL 

Ahead of the latest fighting, the TPLF formed an alliance with six other Ethiopian armed groups that say they aim to overthrow Abiy's government. 

While the TPLF and allied fighters made some initial gains in the neighbouring Amhara and Afar regions, pro-government forces say those have been largely reversed. 

Explosions were heard late Wednesday night in Addis Ababa, in what a source linked to the opposition alliance said were drone attacks targeting the ENDF headquarters there and other sites.

Reuters could not independently verify this. 

If confirmed, it would be the first known drone attack by anti-government forces on Addis Ababa, which is hundreds of kilometres from the northern front lines.