Najaf fighting kills 77

A radical Shi'ite cleric and Iraq's interim prime minister have made gestures to defuse a two-week uprising in Najaf, after ferocious US air strikes and heavy fighting killed at least 77 people.

Firebrand leader Moqtada al-Sadr was preparing to hand control of the Imam Ali Mosque in the city to religious authorities while Prime Minister Iyad Allawi pledged his forces would not storm the sacred site, where the cleric's Mehdi Army has holed up.

But Sadr continued to reject one of Allawi's key demands, to disband his Mehdi Army, a spokesman for the cleric said.

The Health Ministry said at least 77 people had been killed and 70 wounded in the past 24 hours in the southern city.

The rebellion has killed several hundred people, driven world oil prices to new highs and put Allawi on the back foot less than two months after he took over from US-led occupiers with a pledge to stabilise Iraq ahead of January elections.

"We are not going to attack the mosque, we are not going to attack Moqtadr al-Sadr in the mosque," Allawi told BBC World Service radio, adding Sadr's militia had wired up the country's holiest Shi'ite shrine with explosives.

"The olive branch is still extended ... We are not a warring people. On the contrary, we want a peaceful solution."

The conciliatory statements followed the most intense US bombardment of Mehdi positions since the conflict erupted.

US AC-130 and helicopter gunships struck repeatedly, sending orange flashes and white sparks into the night sky. Booming explosions shook houses far from the battle zone.

The attacks eased at daybreak.

Sadr spokesman Sheikh Ahmad al-Sheibani said aides to the cleric were meeting representatives of Grand Ayatollah Ali al-Sistani in Najaf. Sistani, Iraq's top religious authority, is recovering in Britain after heart treatment.

The handover would mean militia wanting to enter the shrine and its courtyard would have to leave their weapons outside, Sheibani said. "A delegation is meeting aides to al-Sistani now to hand over the keys to the Imam Ali Mosque," Sheibani said.

Nevertheless, the comments are likely to get a cautious response from Allawi's government, after two days of backtracking by Sadr on earlier offers to end the crisis.

NO WEAPONS HANDOVER

The Mehdi Army is entrenched inside the shrine and the narrow alleyways leading to it, along with an adjoining ancient cemetery. Witnesses said there were several hundred fighters holed up in the sprawling mosque complex.

Sheibani said the Mehdi Army would keep its weapons.

"The government and occupation forces started this. They targeted our leaders and symbols," he said.

The militia has been running the shrine, a sacred site to Shi'ites around the world, since an earlier Shi'ite uprising in April. The shrine marks the tomb of Imam Ali bin Abi Talib - the cousin and son-in-law of the Prophet Mohammad.

Allawi's ministers had vowed to storm it if Sadr ignored the demands. Any attack could spark outrage from Iraq's majority Shi'ite community, especially if US forces are involved.

The US raids overnight left many residents dazed.

"There was no way to sleep. Bang, bang all night," said Aziz Hassan, 40. "Many stores are closed. I am living on bread."

Allawi urged Sadr, the scion of a revered Shi'ite clerical dynasty and the most visible face of resistance to his rule, to seek a political path for his grievances.

The crisis has disrupted Iraq's oil exports and unnerved world oil markets. Crude oil futures prices touched a record $48.88 for a barrel of US light crude on Friday.

Saboteurs had set ablaze the headquarters of the South Oil Company in the port city of Basra on Thursday.

"Expect anything now. Sadr's followers have little else to respond with to US force ... other than to keep hitting the oil sector," said an oil official, who declined to be identified.

Clashes also broke out in Sadr's powerbase in a poor Baghdad suburb. The Health Ministry said 13 people were killed and 107 wounded in Baghdad fighting in the past 24 hours.

US warplanes attacked targets in the Sunni Muslim city of Falluja for a second time on Friday, witnesses said.

There was no word on casualties. A similar raid overnight killed five people and wounded six, hospital sources said.

- REUTERS

Herald Feature: Iraq