The Dakar government has sent forces to support the elected Guinea-Bissau government of President Joao Bernardo Vieira as it struggles with a military rebellion.
Portuguese radio said the reported death toll could not immediately be confirmed.
Rebels holding Guinea-Bissau's airport said they had taken seven French nationals hostage, but French authorities denied the claim.
The war of words followed a lull in fighting between the rebels and Guinea- Bissau loyalist forces backed by Senegalese troops helping President Vieira put down the revolt, which erupted on 7 June.
Portuguese state radio Antena One quoted a spokesman for the rebels as claiming that the captured French nationals had been armed and ready to fight. He gave no further details about their seizure or identity.
The French ambassador, Francois Chappellet, denied the presence of armed Frenchmen. "I categorically deny that the mutineers are holding any French national," he said. "This is pure fabrication." He added that the handful of French security personnel remaining in the West African capital were there for his protection and that of the embassy.
The rebel claim emerged as government troops backed by neighbouring Senegal and Guinea sought to drive mutineers out of their remaining bastions. The rebels have denied loyalist claims to be on the verge of victory.
Troops loyal to President Vieira, who is being backed by some 1,500 Senegalese and Guinean soldiers, said on Thursday that they had driven rebels from the Bra military complex and forced them to fall back on the nearby airport on the city's outskirts.
But the rebels, who took Bra and the powerful brigade there at the start of the revolt, said yesterday that, far from being in disarray, they were preparing for an advance on the capital.
Most residents of Bissau, whose estimated 300,000 people form nearly a third of the population of the impoverished country, have fled towards the interior. That has raised fears of epidemics in the cholera-prone country. Relief organisations have called for immediate aid for the civilian population and Portugal and France have promised food and medicines. - Reuters