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US and Iraqi forces killed 30 Shiite militiamen during a fierce street battle in the southern city of Diwaniyah in which a US main battle tank was severely damaged.
The fighting erupted amid attacks around the country, which is in the grip of a bloody sectarian conflict that kills around 100 people daily, and as police found the bodies of 86 murder victims over two days in Baghdad.
Gunbattles broke out in Diwaniyah after a joint Iraqi and US force tried to arrest a local Shiite militia leader accused of slaughtering Iraqi soldiers during a previous clash in August, Iraqi officials said.
A US tank was disabled by a barrage of rocket-propelled grenades (RPGs) during the clashes, but the snatch squad returned and seized their suspect, identified by Iraqi sources as a local commander of the Mahdi Army militia.
“Iraqi army and Multi-National Division Baghdad (MND-B) soldiers killed approximately 30 terrorists and detained a high-value target after a terrorist attack today in Diwaniyah, south of Baghdad,” a military statement said.
An Iraqi defence official named the suspect as Kifah al-Greiti, a commander in the Mahdi Army of Shiite radical leader Moqtada al-Sadr.
In August, Mahdi Army fighters killed more than 20 Iraqi soldiers in Diwaniyah, officials said at the time, accusing the militia of murdering in cold blood a dozen troops who ran out of ammunition during a gunbattle.
The attempt to arrest Greiti provoked a fierce response.
“An M1A2 Abrams tank was struck by multiple RPG rounds and was severely damaged. Iraqi army and MND-B soldiers engaged the enemy forces and killed approximately 30 of the terrorists,” the US statement said.
“Reportedly, up to 10 enemy RPG teams attacked the combined forces, of which six teams were destroyed. MND-B and IA soldiers immediately secured the area so the damaged vehicle could be recovered.”
Eventually, the Iraqi soldiers captured their suspect, the military said, adding that thus far there were no reports of US or Iraqi troop casualties.
Medics at Diwaniyah's main hospital reported that seven civilians had been wounded during the battle, one of them critically, while sporadic firing continued around the city into Sunday afternoon.
Later, US and Iraqi forces sealed off and entered the hospital, apparently hunting for wounded militiamen.
The ferocity of the fighting was a stark reminder that Iraqi and US forces still face a difficult political and military challenge if they are to master the powerful Shiite militias which control large parts of the country.
US forces in Baghdad have recently been conducting exploratory forays into districts near the Shiite militia bastion of Sadr City in Baghdad but have yet to receive Iraqi government approval for a full-scale assault.
Also in Baghdad, a senior officer in the Iraqi police internal affairs department was shot dead, just five days after an entire police brigade was accused of colluding with sectarian death squads.
The victim was identified as Colonel Tamer Salman, assistant to the director of police internal affairs, an increasingly important unit at a time when the government is under pressure to purge disloyal officers.
Iraq's fledgling police force has been accused of taking sides in the country's increasingly brutal sectarian war, with Shiite-dominated units said to allow militia fighters to attack Baghdad's Sunni minority.
Other attacks around the capital on Sunday included a central Baghdad mortar attack on a police patrol which killed one policeman and wounded another, as well as a bystander.
Another bomb attack in the city centre killed one bystander and wounded 20 people, including four police who were apparently targeted.
More than 51 bodies were found in Baghdad on Saturday and 35 on the following day plus five more which bobbed up in the Tigris river south of the capital — two of them skeletal remains, three of them recently beheaded.
South of the capital in restive Babil province, police discovered a corpse lying by the side of the road. When they attempted to move it, gunmen opened fire on them, wounding a policeman.
One truck driver was killed when a supply convoy was attacked by a roadside bomb near Balad, north of Baghdad, officials said.
In Mussayib, a rain of mortars hit a residential neighbourhood, killing one person and wounding two.
A roadside booby-trap exploded in the northern town of Rabiaa on the Syrian border, killing police Colonel Yahiya Mohammed as his convoy passed, his colleague Major Ahmed Mohammed told AFP.
The central province of Salaheddin witnessed the deaths of four civilians near former leader Saddam Hussein's home village when their car struck a roadside bomb.