Autonomous path planning of Micro Air Vehicles (MAVs) in an urban environment is a challenging task because urban environments are dynamic and have variety of obstacles, and the locations of these obstacles may not be available a priori. In this paper we develop a reactive guidance strategy for collision avoidance using bearing-only measurements. The guidance strategy can be used to avoid collision from circular obstacles and to follow straight and curved walls at safe distance. The guidance law moves a obstacle in the sensor field-of-view to a desired constant bearing angle, which causes the MAV to maintain a constant distance from the obstacle. We use sliding mode control theory to derive the guidance law, which is fast, computationally inexpensive, and guarantees collision avoidance.