Sadr defiant

A firebrand Shi'ite cleric yesterday defied demands from Iraq's interim government that his militia pull out of Najaf and threats from his fighters forced a halt to oil output in the south.

Despite a brief lull to evacuate casualties, there was no sign that fighting would ease after days of fierce clashes with US marines who claim to have killed 360 of his fighters.

Moqtada al-Sadr's men hit the oil industry for the first time, raising fears about a sector already plagued by sabotage.

"Pumping from the southern oilfields to storage tanks at Basra was stopped today after threats made by al-Sadr," said an Iraqi oil official. "It will remain stopped until the threat is over," the official told Reuters.

The official said militiamen from Sadr's Mehdi Army had threatened to sabotage production by the state Southern Oil Company, based in Basra.

He said storage at the Gulf Basra terminal was sufficient to keep exports running for about two days. Iraq has been exporting about 1.9 million barrels a day.

Battles in several cities tested the wills of the firebrand Sadr and the interim government of Prime Minister Iyad Allawi, which has vowed to impose stability and lead an economic recovery which would depend heavily on oil exports.

Iraq's political establishment was rocked on another front when a judge issued arrest warrants against former Pentagon darling Ahmad Chalabi and his nephew Salem Chalabi, the US-appointed lawyer supervising Saddam Hussein's trial.

Both dismissed the charges as politically motivated.

The fresh Shi'ite uprising poses the most serious test for Mr Allawi since he took over from US-led occupiers on June 28.

Heavily armed marines backed by aircraft tightened their noose around the holy city of Najaf in heavy battles yesterday, but a senior US military official denied coalition forces were hunting the young cleric Sadr.

Sadr thundered defiance during a news conference at Najaf's holiest shrine, the Imam Ali mosque.

"The Mehdi Army and I will keep resisting. I will stay in holy Najaf and will never leave," Sadr said. "I will stay here until my last drop of blood."

The US military official said marines had killed at least 360 loyalists from Sadr's Mehdi Army militia since the uprising in Najaf erupted on Thursday. Sadr's men contest that figure.

Fighting in other cities has killed dozens in recent days. In the southern city of Basra, British troops fought street battles with Mehdi Army militiamen, who set fire to two British military Land Rovers. Five British soldiers were wounded.

A military spokeswoman said Iraq's second largest city and southern oil production centre was "extremely tense".

Fighting also spread to the southern city of Diwaniya, where witnesses said Sadr's brazen fighters surrounded the governorate and police station and fighting inflicted several casualties.

Fresh clashes also broke out in a Shi'ite district of Baghdad named after Sadr's father yesterday.

The government imposed a curfew from 4 p.m. until 8 a.m. until further notice in the sprawling Sadr City slum, home to two million people, but many residents ignored the order.

Explosions and gunfire echoed from the heart of Najaf, Iraq's holiest Shi'ite city 160 kilometres south of Baghdad. Smoke rose from near an ancient cemetery, scene of hand-to-hand combat in recent days, as US aircraft flew overhead. Mr Allawi visited the shell-scarred city on Sunday and demanded Sadr's militia back down. Sadr, a hero to Iraq's downtrodden Shi'ite youth, rejected the order to quit his hometown.