Armenia accused Azerbaijani forces of striking the main city in the disputed Nagorny Karabakh region on Friday as fighting raged for a sixth day.
Yerevan said it was ready to work with mediators for a ceasefire but Azerbaijan fired back that Armenia must first withdraw its troops.
International calls for the two neighbours to halt fire and begin talks are intensifying as fears grow that the clashes could expand into a multi-front war sucking in regional powers Turkey and Russia.
French President Emmanuel Macron has warned NATO member Turkey -- which backs Azerbaijan -- against the alleged deployment of militants from Syria to the Karabakh conflict.
Baku and Yerevan have for decades been locked in a simmering conflict over the ethnic Armenian province that broke away from Azerbaijan in a bitterly fought war in the 1990s.
New fighting that erupted on Sunday has been the heaviest in decades and has claimed nearly 200 lives, including more than 30 civilians.
Armenia said Azerbaijani forces on Friday struck Stepanakert, the main city in Karabakh, wounding "many" people and damaging civilian infrastructure.
Ambulance sirens were heard following loud explosions.
The separatist government in Stepanakert said Azerbaijani forces had destroyed a bridge linking Armenia to Karabakh.
- 'Why should we be afraid?' -
Local residents said they were getting used to the shelling and fierce clashes nearby.
"Life is okay," Arkady, a 66-year-old resident, told AFP.
"We are Soviet people. Why should we be afraid? These drones are like toys to us."
He said he did not want the two sides to enter talks, describing negotiations with Azerbaijan as "nonsense" and insisting the enemy should be crushed.
In Azerbaijan, too, some expressed little appetite for talks.
"We are not afraid. We do not have a lot of wounded," Anvar Aliyev, a 55-year-old taxi driver, told AFP in the country's Fizulinsky district.
"We have to return to our lands."
- 'Ready to engage' -
Yerevan on Friday expressed its readiness to work with international mediators to bring a halt to the fighting.
Armenia "stands ready to engage" with France, Russia, and the United states -- which co-chair the OSCE group of mediators -- "to re-establish a ceasefire regime," the foreign ministry in Yerevan said.
But it said that talks could not begin unless fighting is halted.
"The immediate priority is to cease hostilities and restore a ceasefire regime established in 1994-1995," foreign ministry spokeswoman Anna Nagdalyan told AFP.
But Azerbaijan retorted that Armenia must first withdraw its troops.
"If Armenia wants to see an end of this escalation of the situation... Armenia must end its occupation" of Karabakh, presidential aide Hikmet Hajiyev told reporters.
At an EU summit on Thursday, Macron issued a warning to Ankara, urging "all NATO partners to face up to the behaviour of a NATO member".
Macron said intelligence reports had established that 300 fighters from "jihadist groups" in Syria had passed through Turkey en route to Azerbaijan, saying "a red line has been crossed" and demanding an explanation.
The defence ministry of Karabakh's separatist government on Friday reported the deaths of 54 more of its troops.
It said there was fighting all along the frontline after "a relatively calmer night".
Armenian defence ministry spokesman Artsrun Hovhannisyan accused Azerbaijan of using "cluster munitions" prohibited by international law.
"Turkish military are fighting alongside Azerbaijani forces," foreign ministry spokeswoman Nagdalyan told reporters. "Azerbaijan is using Turkish weaponry, drones and fighter jets."
Both sides claimed to have killed more than 2,000 enemy troops but it has not been possible to verify the statements.
Azerbaijan's foreign ministry said local and foreign journalists came under Armenian shelling in the village of Gapanly.
Two journalists working for the French daily Le Monde were injured in a rocket strike and were being evacuated after undergoing surgery in Karabakh on Thursday.
- 'Close coordination' -
In a joint appeal Thursday, Russian President Vladimir Putin, US President Donald Trump and Macron urged the two sides to return to negotiations aimed at resolving their longstanding territorial dispute.
Russia also suggested it was making progress in diplomatic efforts with Turkey.
It said Foreign Minister Sergei Lavrov and Turkish counterpart Mevlut Cavusoglu had confirmed they were ready for "close coordination" to try to stabilise the situation.
Yerevan is in a military alliance of ex-Soviet countries led by Moscow and has accused Turkey of directly supporting Azerbaijan in the fighting by deploying aircraft in support of Baku and sending mercenaries from northern Syria to join the fighting.
Armenia has recorded 158 military deaths and 13 civilian casualties since Sunday. Azerbaijan has not reported any military deaths but said 19 civilians were killed after Armenian shelling.
Karabakh's declaration of independence from Azerbaijan sparked a war in the early 1990s that claimed 30,000 lives, but it is still not recognised as independent by any country, including Armenia.
Armenia and Karabakh declared martial law and military mobilisation Sunday, while Azerbaijan imposed military rule and a curfew in large cities.
Talks to resolve the conflict have largely stalled since a 1994 ceasefire agreement.