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By Yara Bayoumy and Mohammed Ghobari SANAA (Reuters) - The Yemeni army and Houthi fighters waged artillery and gunbattles near the presidential palace in Sanaa on Monday in the most intense clashes since the Shi'ite Muslim movement took control of the capital in September. Widely viewed as Shi'ite Iran's ally in its regional struggle for influence with Saudi Arabia, the Houthis - now part of the Yemeni government - said they would "escalate the situation" if their demands for a fair stake in a new constitution were not honored. The fighting began in the early morning, with gunfire and explosions reverberating across Sanaa and close to the presidential palace and the residence of the national security chief. Heavy gunfire and explosions shook Hadda district in the diplomatic quarter in Sanaa's south.
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