*Separatists, who want to split from the north, are backed by the UAE
The southern separatists' takeover of Aden, the interim seat of Yemen's government, could leave Saudi Arabia struggling to hold together a military coalition fighting the Iran-aligned Houthis.
It also risks fragmenting southern Yemen as the United Nations struggles to restart talks to end the 4-1/2-year war that has pushed millions to the brink of famine.
Separatists, who want to split from the north and are backed by the United Arab Emirates, effectively seized Aden by taking over the government's military bases on Saturday after they accused a party allied to President Abd-Rabbu Mansour Hadi of complicity in a Houthi missile attack on their forces.
The southern forces had been nominally allied with the coalition fighting the Houthis.
But the new developments have fractured the UAE-Saudi alliance, making it harder for Riyadh to weaken the grip of the Houthis, who hold Sanaa and most urban centres.
The Western-backed coalition intervened in Yemen against the Houthis in 2015.
The Houthis have no traction in the south, where the UAE has armed and trained 90,000 Yemeni troops drawn from southern separatists and coastal plains fighters.
But the Southern Transitional Council (STC) that leads the separatists does not have broad support outside Aden. Its move risks igniting infighting in the south and emboldening militant groups like al Qaeda, among Yemen's many destabilising forces.
Meanwhile , the Saudi-led coalition intervened in Aden on Sunday in support of the Yemeni government.
The infighting, which broke out on August 8 to control the port city , has killed 40 people and injured 260, the United Nations said.
"It is heart-breaking that during Eid al-Adha families are mourning the death of their loved ones instead of celebrating together in peace," said Lise Grande, the UN Humanitarian Coordinator in Yemen.
The Saudi-led coalition said it attacked an area that posed a "direct threat" to the government of President Abd-Rabbu Mansour Hadi, without providing details.
In a sign of support for Yemen's beleaguered president, Saudi Arabia's King Salman met Hadi on Sunday in the Mecca region, on the sidelines of the Haj pilgrimage, the state-run Saudi Press Agency reported.
The meeting "discussed efforts to achieve security and stability" in Yemen, it said. Hadi is based in the Saudi capital Riyadh.
"This is only the first operation and will be followed by others ... the Southern Transitional Council (STC) still has a chance to withdraw," Saudi state TV quoted it as saying.
Several hours after the coalition announcement, there was no indication that STC forces were preparing to leave government military camps they seized on Saturday. Hadi's government has asked Abu Dhabi to stop backing southern forces.
The infighting is a serious setback for the coalition in its more than four-year campaign against the Houthis.
Analysts said Abu Dhabi and Riyadh, allies united against Iran, would work together to contain the crisis even though the UAE in June scaled down its military presence in Yemen.
The war has revived old strains between north and south Yemen, formerly separate countries that united into a single state in 1990 under slain former President Ali Abdullah Saleh.
The Houthis' deputy foreign minister on Saturday said the Aden events proved Hadi's government was unfit to rule and called for dialogue with other main powers in Yemen to establish a federation under a "unified national framework".