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The rebels entered the town earlier this month and have since clashed almost daily with PYD gunmen for control over the area. Both factions add to the complexity of Syria’s conflict, which has taken on heavy sectarian — and ethnic — overtones.

The fighting in recent days has left dozens of people killed or wounded, and dozens captured on both sides. Osso and Abdul-Rahman said PYD forces and the rebels agreed to exchange prisoners and to withdraw their militiamen from the town.

Abdul-Rahman said the rival parties agreed to form a local council that will run day to day life in Ras al-Ayn. Osso said thousands of people who fled the town, which has a mixed population including Arabs, Kurds, Chechens and Christians, have started returning home.

A journalist in Ras al-Ayn told The Associated Press that the town has been calm since Saturday, adding that cars with PYD gunmen were seen in the streets with loudspeakers urging residents to return to their homes after the truce was reached. He added by telephone that parts of the town were heavily damaged by government air raids earlier this month.

When regime forces withdrew from Kurdish areas in northeastern Syria in July, they were quickly replaced by Kurdish fighters from PYD. Those forces then battled rebel fighters after they pushed their way into predominantly Kurdish areas. The Kurdish group is affiliated with the PKK, rebels fighting for autonomy in the Kurdish-dominated southeast region of Turkey.

The Islamic militants, who are fighting on the side of the rebels, have played a bigger role in the Syrian conflict in recent months and many openly say they want to set up an Islamic state. The opposition is split, with some groups strongly opposed to the influence of extremists.

The Observatory also said that the health of leading opposition figure Abdul-Aziz al-Kheir, who it said is being held by one of the country’s security agencies, has deteriorated recently. It did not disclose details of his health problems.

The National Coordination Body for Democratic Change in Syria accused the regime of being behind the disappearance of two of its leaders, including al-Kheir, shortly after they arrived home from China in September.

Al-Kheir, 61, comes from Assad’s hometown of Kardaha and belongs to the president’s ruling Alawite minority sect. He spent long periods in jail in the past because of his opposition to the regime.

Associated Press writer Suzan Fraser contributed to this report from Ankara, Turkey.