Houthi rebels withdraw from city centre as Saudi planes drop medical aid and weapons to forces backing president.
Houthi forces have pulled back from a central Aden district after intense gun battles with forces loyal to ousted President Abd-Rabbu Mansour Hadi.
The setback for the Shia fighers on Friday came as warplanes from the Saudi-led coalition dropped weapons and medical aid to fighters defending the southern Yemeni city, a last symbolic foothold of the country's president, who fled the country after the Houthis seized the capital, Sanaa, and is now holed up in Saudi Arabia.
The Houthi fighters and their allies withdrew from Crater neighbourhood, as well as one of Aden's presidential residences which they seized a day earlier, residents and a local official said.
Their withdrawal followed overnight clashes and an air strike on the presidential palace at Ma'ashiq, overlooking Crater. At least one Houthi tank was destroyed and another taken over by Hadi's loyalists, they said.
Around 12 Houthi fighters were killed in the clashes in Aden, but there has been no word on casualties suffered by forces loyal to Hadi.
Brigadier General Ahmed al-Asiri, a spokesman for the Arab coalition told a press conference air strikes had significantly degraded the Houthi fighters' military capacities and Hadi loyalists had gained ground in the city.
Asiri said the Houthis were only creating "media opportunities" when they captured the presidential residence in Aden, and were cornered in some areas.
Despite inflicting heavy losses on the Houthis, the airstrikes might not be enough to halt their advance, said Al Jazeera's Mohamed Vall, who has reported extensively on Yemen.
"Airstrikes have never really been so decisive. The Houthis can easily blend with the local population and they have almost the entire support of the Yemeni army," he said.
"They [Saudi-led coalition] know they cannot win this war without putting troops on the ground...they are probably waiting for more weakening of Houthi defences [before they do that]."
Asiri accepted it would be difficult for the Saudi-led coalition to eliminate the Houthis entirely because they were moving in many small groups.
Early on Friday, warplanes from the coalition dropped crates of weapons and medical supplies by parachute over Tawahi, a district on the far end of the Aden peninsula which is still held by Hadi loyalists, fighters told the Reuters news agency.
The crates included light weapons, telecommunications equipment and rocket-propelled grenades, they said.
The coalition, which is trying to reassert Hadi's authority as a prelude to political negotiations, has repeatedly said that sending ground troops into Yemen remains an option but not an automatic move.
Officials have declined to say whether special forces have already deployed. The Saudi ambassador to Washington, Adel al-Jubeir, said on Thursday the kingdom does not have "formal" troops on the ground in Aden.
Tribal sources in Yemen said on Friday that Saudi Arabia had started to remove parts of a fence along its border with the northwestern Yemeni provinces of Saada and Hajja.
This could be a prelude to an incursion by ground troops, but may also be part of more modest efforts to secure the frontier area, which on some stretches includes a buffer zone between the two countries.
The Saudi-led coalition involves six nations that belong to the Gulf Cooperation Council. The GCC members include Saudi Arabia itself, Bahrain, Kuwaiti, Oman, Qatar and the United Arab Emirates.
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