Armed clashes between US and Iraqi forces continue in Najaf

U.S. forces are pounding Shi'ite militia from the air and ground in the holy Iraqi city of Najaf, and using loudspeakers to urge the entrenched fighters to surrender.

U.S. helicopter gunships pounded positions near the city's ancient Shi'ite Muslim cemetery, a haven for militiamen from firebrand cleric Moqtada al-Sadr's Mehdi Army who have been battling American marines for six straight days.

But in a relief for the cash-strapped government, Iraq is expected to resume full oil exports on Wednesday after it shut one of two pipelines feeding the country's southern terminal as a security precaution, a South Oil Company official said, reports Reuters.co.uk

According to Guardian.co.uk the interim Iraqi prime minister, Ayad Allawi, ordered Mr Sadr's men to leave Najaf at the weekend, but the cleric yesterday said he would not leave his hometown "until the last drop of my blood is spilled".

Yesterday, the uprising began to affect Iraq's crucial oil industry, as pumping to the southern port of Basra - the country's main export outlet - was halted because of militant threats to infrastructure.

Around 1.8 million barrels per day, or 90% of Iraq's exports, move through Basra, and any shutdown would badly hamper reconstruction efforts.

US marines say they have killed 360 of Mr Sadr's loyalists since fighting began in Najaf on Thursday, but militants say the number is much lower.

Battles in other cities have, however, killed dozens of people as the radical Shia uprising spreads, presenting Mr Allawi with his toughest challenge since taking office on June 28.