Iraqi troops backed by U.S. forces battled gunmen in Baghdad's Sadr City on Sunday, a return to heavy fighting in the capital after Shi'ite cleric Moqtada al-Sadr pulled his militiamen off the streets a week ago.
Hospital sources said at least 25 Iraqis were killed in the clashes and 98 wounded.
Rocket or mortar attacks killed three U.S. soldiers and wounded 31 of them in Baghdad, among the biggest tolls of injured troops faced by the Americans in months. That included two U.S. soldiers killed and 17 wounded in a strike on the fortified Green Zone government and diplomatic compound.
A fourth U.S. soldier was killed by a roadside bomb in Diyala province to the north and a fifth died in an attack in eastern Baghdad in which the military gave no further details.
The fighting follows a week of relative calm after a crackdown by Prime Minister Nuri al-Maliki on Sadr followers led to battles across the capital and the south late last month.
Iraqi soldiers were moving through two southern sectors of Sadr City, a Shi'ite slum of 2 million people and stronghold of Sadr's Mehdi Army militia, said U.S. military spokesman Lieutenant-Colonel Steven Stover. U.S. helicopters fired at least two Hellfire missiles, killing nine fighters, he added.
The unrest comes two days before U.S. Ambassador Ryan Crocker and U.S. commander General David Petraeus are due to deliver key testimony to the U.S. Congress on progress in Iraq.
Police said the joint U.S.-Iraqi military operation began early on Sunday. Gunfire could be heard throughout the day.
Lieutenant-General Abboud Qanbar, head of the Iraqi military in Baghdad, said all armed groups must hand in their weapons.
"If they refuse to surrender their arms, we will confiscate them," Qanbar told reporters at a police station in Sadr City.
Mehdi Army fighters bristled at the raids. "I have lost my cousin in these clashes today. I think Maliki will be happy now," a Mehdi Army street commander giving his name as Abu Ammar told Reuters.
U.S. Apache helicopter gunships swooped overhead and a column of black smoke towered over the Jamila market, a vast bazaar on the edge of the slum that supplies wholesale food for much of the eastern half of the capital.
