Falluja peace talks underway

4.00pm - By FIONA O'BRIEN

BAGHDAD - Three Japanese hostages were freed in Iraq on Thursday, but the murders of an Iranian diplomat and an Italian captive were chilling proof of the risks foreigners face as rebels battle the US-led occupation.

America's top general said talks were under way to try to bring peace to the besieged Sunni Muslim city of Falluja and to avoid a bloodbath in Shi'ite Najaf.

General Richard Myers, chairman of the Joint Chiefs of Staff, told a news conference Iraq's US administrator Paul Bremer was using "multiple channels" in the negotiations.

A Russian news agency quoted rebel Shi'ite cleric Moqtada al-Sadr as saying his followers were "ready to hold talks with the occupying regime, but have no intention of dropping the demands we have placed before it."

"First and foremost, this means our demands for a pullout from all regions of Iraq and an end to the aggression against the Iraqi people."

The RIA Novosti agency said Sadr was speaking on Thursday in Najaf.

US troops have encircled Najaf. The United States said on Monday it aimed to kill or capture the cleric and destroy his militia, which launched an uprising this month.

An audio tape apparently from Osama bin Laden, aired on Arab television, offered a truce to Europeans if they pulled troops out of Muslim nations but vowed to continue fighting the United States and Israel.

"Whoever rejects this truce and wants war, we are its (war's) sons and whoever wants this truce, here we bring it," it said. Secretary of State Colin Powell said the tape appeared authentic. European states dismissed its truce offer.

The three Japanese, apparently well, were handed over to a Sunni organisation in Baghdad which has been facilitating hostage releases, then driven to the Japanese embassy.

The two men and a woman were captured last week. Two more Japanese civilians have been reported missing near Baghdad.

Italy has vowed to keep its troops in Iraq despite the videotaped murder of one of four Italian hostages held there.

"They have destroyed a life. They have not cracked our values and our efforts for peace," Italian Prime Minister Silvio Berlusconi said after the killing of Fabrizio Quattrocchi.

Al Jazeera television said kidnappers had threatened to kill three other Italian hostages unless Italy's 3000 troops in Iraq are withdrawn.

Iranian diplomat Khalil Naimi was shot dead in his car near the Iranian diplomatic mission in Baghdad.

An Iranian delegation has been in Iraq to help mediate between US-led authorities and Shi'ite cleric Moqtada al-Sadr.

Iran said Naimi's killing would not derail that mission, but bitterly attacked Washington's "childish policies" in Iraq, calling on US forces to pull out and trust the country to Iraqi people.

Insurgents enraged by the US siege of Falluja, where more than 600 people were reported killed in last week's fighting, have kidnapped dozens of foreigners, mostly in the Sunni heartlands west of Baghdad. Many hostages have been released.

There was sporadic fighting on Thursday in and around Falluja, where Iraqi mediators have been trying to establish a truce. "I think we have to be prepared... that there may be further military action in Falluja," Myers said.

The first of three Russian planes sent to evacuate 365 citizens of ex-Soviet states left Baghdad on Thursday following the kidnapping and swift release of three Russians and five Ukrainians in Baghdad earlier in the week.

Recent weeks have been Iraq's bloodiest since Saddam Hussein was ousted a year ago. The US military has lost at least 93 troops in combat since March 31 -- four more than the total killed in the three-week war that toppled Saddam.

"I certainly would not have estimated that we would have had the individuals lost that we have had lost in the last week," Defence Secretary Donald Rumsfeld told a Washington news conference.

The chaos in Iraq has shown how hard Washington is finding the task of stabilising the country it invaded last year.

The stretched US military has decided to keep more than 20,000 troops in Iraq beyond their year-long tours of duty.

Democratic White House challenger John Kerry attacked President Bush's Iraq policy.

"Everything he did in Iraq he's going to try to persuade people has to do with terror even though everybody here knows it had nothing whatsoever to do with al Qaeda and everything to do with an agenda that they had preset," Kerry said in New York.

(Additional reporting by Luke Baker, Ghaith Abdul-Ahad and Michael Georgy in Baghdad, Fadel Badran in Falluja, Gleb Bryanski near Najaf and Will Dunham in Hilla)

- REUTERS

Herald Feature: Iraq