Iraqi security forces clashed with Shiite militia fighters for a second day on Friday, leaving at least two police officers and two gunmen dead, police said.
The fighting in Kut broke out after the factions from the Mahdi Army militia attacked checkpoints around the city amid a crackdown by Iraqi troops.
The fighting further frayed a seven-month-old cease-fire called by Shiite cleric Muqtada al-Sadr to rein in his militia.
A joint U.S.-Iraqi operation also targeted a Shiite militia stronghold in the volatile city of Diwaniyah, 80 miles south of Baghdad, and at least 12 suspected fighters were detained, according to local police. The U.S. military had no immediate comment.
Battle for oil-rich area
The fighting underscored rising tensions between rival factions battling for control of the oil-rich southern Shiite heartland with an eye toward the eventual withdrawal of U.S.-led forces.
The United States has been careful not to accuse al-Sadr himself of any role in ongoing violence, and instead blames rogue militiamen violating his cease-fire order.
Nevertheless, U.S. and Iraqi officials have been cracking down on al-Sadr's followers, angering many in the movement who complain the security forces have been infiltrated by rival factions.
Iraqi reinforcements were sent to Kut four days ago to wrest control of a militia stronghold controlled by the Mahdi Army fighters, who have become increasingly brazen in recent weeks in their attacks on security forces, police said.
Al-Sadr, whose militia fought two uprisings against U.S. forces in 2004, first called a cease-fire last August and extended it last month. But two weeks ago he issued a statement telling his followers they could defend themselves if attacked.
U.S. commanders have said al-Sadr's cease-fire has contributed to a 60 per cent drop in violence since last June, allowing them to push ahead with plans to begin withdrawing 20,000 troops sent to Iraq last year to help curb sectarian bloodletting.
They are therefore likely to be worried by any sign that al-Sadr's truce is no longer being observed by some elements of his militia, who are estimated to number in the thousands.
U.S. military spokesman Major Mark Cheadle said U.S. forces had also launched an operation on Thursday in the western Rashid district of Baghdad to target gunmen firing mortar bombs on civilian areas.
Six gunmen were killed by ground troops and air strikes by Apache attack helicopters and two detained, he said.
In another development, the U.S. military released 13 Iraqi detainees who were welcomed home in a ceremony held in the former Sunni insurgent stronghold of Azamiyah in northern Baghdad. It was the latest in a series of releases meant as a goodwill gesture to promote reconciliation efforts with minority Sunnis who have recently turned against al-Qaida in Iraq.
Muntasir Abdul-Mahdi said he had been detained at Camp Bucca for a year after being arrested by U.S. troops.
"They said that they would make inquiries, but I was there for one year," he told AP Television News. "I am innocent. They released us because we are innocent."