Iraq forces and militants clash in Basra

Militants loyal to Shi'ite cleric Moqtada al-Sadr clashed with Iraqi security forces throughout Iraq's southern oil hub of Basra for a second day on Wednesday.

A health official said 40 people had been killed and 200 wounded in the first day of the clashes, including civilians, gunmen and Iraqi security forces.

Police said heavy gunbattles between the two sides restarted early Wednesday in five districts of the city after a brief lull, as the Iraqi military continued its operation to clear the city of armed gunmen.

Mortar or rocket attacks struck Iraqi security forces checkpoints and bases regularly.

Many towns and cities across southern Iraq were under a night-time curfew as authorities sought to prevent further outbreaks of violence.

Ground commander Major-General Ali Zaidan told Reuters his forces had killed more than 30 militants on the first day of the operation, which began before dawn on Tuesday. More than 25 were wounded and around 50 were captured, he said.

"The operation is still going on and will not stop until it achieves its objectives," he said. "It is on the same scale as yesterday."

Police said a roadside bomb exploded near a car in northern Basra early on Wednesday killing all of the passengers.

"Now there is heavy gunfire and I have heard the sounds of explosions. I also saw a group of gunmen planting roadside bombs," said Abbas, a Basra resident who would only give his first name.

In Baghdad there have also been clashes in Sadr city, a poor, crowded area that is a major base of support for Sadr's followers.

A source at Sadr City's Imam Ali hospital said four bodies and 25 wounded arrived overnight.

U.S. military spokesman Lieutenant-Colonel Steven Stover said two members of the Iraqi security forces were killed in an attack on a checkpoint in Sadr City late on Tuesday.

U.S. forces reinforced the checkpoint. A U.S. Stryker armoured vehicle was also destroyed by a roadside bomb in Sadr City, and there were several rocket attacks in the area overnight, he said.

The clashes have threatened a ceasefire Sadr imposed on his Mehdi Army militia last August.

Sadr, an influential leader who has not been seen in public for months, issued a statement calling on Iraqis to stage sit-ins all over Iraq and said he would declare "civil revolt" if attacks by U.S. and Iraqi forces continued.

Streets in Basra were largely empty except for Iraqi security forces, and shops remained closed. At least four Iraqi helicopters could be seen hovering over the city.

"The situation is so tense. I did not go to work today. Nobody is going to work," said Kareem, a Basra resident who would only give his first name. "There are gunmen at every intersection."

An official with Iraq's Southern Oil Company said fighting had not affected Basra's oil output or exports, which provide the vast majority of government revenues.

"The work of the oil companies concerning production and exports continue as normal because the military operations are taking place far away," he said.