Militants from Boko Haram launched an attack on the key city of Maiduguri in Nigeria's northeastern Borno state.
The attack comes during US Secretary of State John Kerry's visit to Lagos, for talks with President Goodluck Jonathan and the main opposition candidate Muhammadu Buhari.
Residents on the outskirts of Maiduguri told the BBC that "hundreds of thousands of people" were fleeing and that the military was keeping a low profile.
"Only prayers will save us now, not the military," a resident said, pointing out that the town was only defended by civilian volunteers who had formed to repel the militant threat.
A resident of the Moronti area, Buba Kyari, told AFP: "It is flying bullets everywhere. All we hear are sounds of guns and explosions. A rocket-propelled grenade hit and killed a person from my neighbourhood who was fleeing into the city."