An artillery bombardment of a busy market in western Rakhine state killed 12 civilians.
The ruling military and anti-junta forces traded accusations in the latest act of violence to rock the Southeast Asian country.
The Arakan Army (AA), a rebel group operating in Rakhine state, which borders Bangladesh, said a warship based in the port city of Sittwe fired shells into Myoma market on Thursday, killing 12 people and injuring more than 80 others.
The junta released a statement on state-run Myawaddy TV, claiming an AA warship fired the shells.
Sittwe and other towns in Rakhine faced blackouts as the junta reimposed restrictions on internet and mobile phone access in the state.
Myanmar has been in a cycle of violence since the military seized power from the elected government in a 2021 coup. The junta is facing its most serious challenge to its authority since October after armed rebel groups launched coordinated attacks on military posts in several states across the country.
In Rakhine, the conflict between the AA and the junta intensified with fighting around the state capital Sittwe, a major port and commercial centre on the Bay of Bengal.
A spokesman for the ethnic armed group said the AA had driven junta troops out of at least five towns, including Paletwa, a key trading post, and Ponnagyun, just 34 kilometres (21 miles) from Sittwe.
