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In a statement, it described the battle in the slum - a stronghold of supporters of radical Shia cleric Moqtada Sadr - as "complex".

Despite the violence, authorities have eased a two-week blockade of the area.

Cars are being allowed in and out at some crossings, although other routes around Sadr City remained blocked.

Residents described the clashes as among the worst fighting there since Iraqi forces launched an offensive against the area a week ago.

Situation 'stable'

US forces used both tanks and air support the Sadr City street battle.

"No US or Iraqi army soldiers were seriously injured and we went on to complete our mission," Maj John Gossart, executive officer of the battalion involved in the fighting, said.

Despite the fighting in Sadr City, the Iraqi government's Baghdad security spokesman, Maj Gen Qassim Moussawi, said the situation was stable and the overnight clashes would not interfere with plans to lift the blockade.

In Najaf, a curfew remained in place after the murder of a close aide to Moqtada Sadr.

The cleric blamed the "occupation" for the death of Riyad al-Nuri, who was killed by gunmen after Friday prayers.

(BBC)

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