US forces killed dozens of Iraqi fighters near Najaf overnight, hours after Washington issued an ultimatum to a radical cleric to clear his militia from mosques in the holy city.
Local television in Najaf said wounded people were dying for lack of blood supplies and issued an urgent appeal for donors.
The clashes were the deadliest since Moqtada al-Sadr and his Mehdi Army militia launched a brief revolt against the US-led occupation three weeks ago. They may mark a new phase in American efforts to dislodge him from Najaf, where he has taken refuge among some of the holiest shrines of Shiite Islam.
Forty-three militiamen were killed, a US official said. An AC-130 gunship -- a massive plane that spews cannon fire across wide areas -- destroyed an anti-aircraft system, she added.
Locals said aircraft had destroyed a militia checkpoint outside Kufa, 10km from Najaf, after a firefight. Staff at two nearby hospitals counted at least 23 dead and 34 wounded. Some of the casualties did not appear to be guerrillas.
As they prepared to bury the dead in the afternoon, local people said they were anxious about what might happen next.
Adding to the US burden, Spanish troops quit Najaf as part of a withdrawal decided by the new government in Madrid, where opposition to the occupation runs high. American troops have been forced to take their place.
In a second flashpoint, the Sunni Muslim town of Fallujah, local police took to the streets in force yesterday as a deadline expired for guerrillas to hand in heavy weapons.
The US Marines, who have besieged the town for three weeks, had said they would join police on patrols as early as yesterday. But they did not, and Iraqi police said there would be talks today on the joint patrols.
Hundreds of Iraqis have died in Fallujah, along with many Americans, in one of the bloodiest conflicts in a year.
Washington is struggling to douse these twin challenges to the new order in Baghdad without inflaming anger at civilian casualties before the US authority hands formal sovereignty back to an appointed Iraqi government on June 30.
Najaf and Fallujah have provided acid tests among Iraq's two main Muslim communities.
The long oppressed Shiite majority broadly welcomed the US invasion that overthrew Saddam Hussein, a Sunni. But impatience with disruption to daily life has angered many -- though support for Sadr's armed response has been mixed.
US Secretary of State Colin Powell said on Monday that US forces would have to maintain considerable powers after the handover, "which in some ways infringes on what some would call full sovereignty."
In Fallujah, US commanders say they face up to 2,000 fighters -- some diehard Saddam loyalists, others trying to reassert Sunni dominance of Iraq, and maybe about 200 foreign Islamic radicals, some possibly linked to al-Qaeda.
The Americans are in no hurry to spark an all-out confrontation in the town, 50km west of Baghdad, but hold out little hope the insurgents will surrender their arms.
Witnesses said US forces had fought guerrillas beside a highway north of Fallujah for around an hour early yesterday.
On Monday, Marines called in air strikes after skirmishes around a mosque left eight insurgents and a soldier dead.
Civilian casualties and the sight of refugees fleeing the city of 300,000 have dismayed many Iraqis. The US offensive began in response to the murder of four American contractors.
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