Talks resumed in Falluja yesterday despite overnight fighting that breached an informal truce in the town where over 600 Iraqis were reported killed in a week of battles between US Marines and Sunni rebels.
Seven Chinese became the latest foreigners to be kidnapped, but others have been freed. Three Japanese remained hostages.
The Falluja clashes grew less intense in the morning and political sources said Iraqi mediators had restarted talks to shore up a truce that gave the town some respite at the weekend.
A spokesman for the US military, which is taking no direct part in the talks, said he hoped the political track would succeed in restoring "legitimate Iraqi control" in Falluja.
Otherwise, Brigadier General Mark Kimmitt said, the Marines were ready to "complete the destruction of enemy forces" there.
Denying that Iraq was in chaos, Kimmitt told a news conference that about 70 members of the US-led forces had been killed this month, but that they had killed about 10 times that number of rebels.
The coalition death toll compares to 89 troops killed in action in the three-week war that toppled former president Saddam Hussein.
Kimmitt had no word on civilian deaths in what has been Iraq's bloodiest period since the fall of Baghdad a year ago.
US forces have been struggling to crush a stubborn Sunni insurgency in central Iraq and a new Shiite revolt led by cleric Moqtada al-Sadr in much of the south.
In the shrine city of Kerbala, US aircraft dropped leaflets telling people to stay away from coalition bases.
"The coalition forces do not wish to harm you, but they will respond if there is an attack," said the leaflets, in Arabic.
Shiite militias control much of central Kerbala and Sadr's men have skirmished with Polish and Bulgarian troops on the outskirts, though they suspended "liberation operations" at the weekend when pilgrims packed the city for a religious occasion.
The US army has vowed to arrest Sadr, now thought to be in the holy city of Najaf, and destroy his Mehdi Army militia.
In recent days, US troops have been moving into Shiite regions of central and southern Iraq, where a Polish-led multinational force is responsible for security.
US troops have battled their way into Kut after clashes with Sadr's militia forced Ukrainian troops to leave the town.
An Iraqi Shiite party said it was mediating between Sadr and US officials, who would not sit at the same table.
Mohsen al-Hakim, son of the leader of the Supreme Council for Islamic Revolution in Iraq (SCIRI), said in Tehran that SCIRI and other groups were trying to arrange a truce.
"So far, five rounds of negotiations have been held with a team appointed by Abdel Aziz al-Hakim, holding talks with Sadr's officials," he said. "We hope to reach an agreement very soon."
Dan Senor, senior spokesman for the US-led administration, denied it was involved in any talks with Sadr.
He said it was vital to defeat insurgents he accused of using mob violence and intimidation before a planned handover of sovereignty to an interim Iraqi government on June 30.
"It is critical that we cleanse the Iraqi body politic of the poison that remains after 35 years of Saddam Hussein's totalitarian rule," he said. "We must confront these forces now. The task will only become more difficult down the road."
Three Marines were killed west of Baghdad on Sunday, the US military said, bringing to at least 470 the number of American troops to die in action during the Iraq conflict.
Many Iraqis, including some members of the US-appointed Governing Council, have been shocked at the ferocity of last week's violence in Falluja, 50km west of Baghdad.
Rafa Hayad al-Issawi, director of Falluja's main hospital, said he believed more than 600 Iraqis had been killed in the town.
"The number may not be absolutely accurate because many families have already buried their dead in their gardens."
The US military has reported losing 14 dead over the weekend, including the two-man crew of an Apache attack helicopter shot down near Baghdad airport on Sunday.
The Marines attacked rebels in Falluja last week in response to the murder and mutilation of four American private security guards ambushed in the town on March 31.
Kimmitt said US-led forces had deployed "a significant amount of combat power" to secure roads west and south of Baghdad.
But guerrillas struck again, setting a US military truck ablaze on the road to Baghdad airport, witnesses said.
Two Iraqi policemen were killed by a roadside bomb in Baquba, north of Baghdad, police said.
Police officers in the northern city of Kirkuk said that a mortar bomb that they believed to have been aimed at a US military base caused the deaths of two Iraqis on Sunday night.
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