Baghdad, Iraq ? Coalition forces fired on suspected foreign fighters in a house in the remote Iraqi desert near Syria before dawn Wednesday, but U.S. officials denied news reports that claimed the attack killed 40 people who were celebrating a wedding.

Video footage from the scene showed fresh graves and the corpses of several children.

A man in a red-and-white head scarf told Associated Press Television News: “The planes came in and shot the whole family. They kept shooting until the morning, until they destroyed all the houses. They didn’t leave anything.”

The AP footage showed a truck containing bloodied bodies, many wrapped in blankets, piled one atop the other. Several were children, one of whom had been decapitated.

The images of civilian casualties, broadcast widely on Arab television, are likely to further inflame anti-American sentiment in Iraq at a time when U.S. forces are confronting armed resistance on multiple fronts.

U.S. officials acknowledged that their troops attacked in the area, but said they fired in response to hostile fire and later recovered weapons, large amounts of cash and other evidence of an insurgent supply route.

The attack on the village of Makr al-Deeb occurred about 2:45 a.m. local time in the desert region near the border with Syria, the deputy police chief of the city of Ramadi, Lt. Col. Ziyad Jabouri, told the Associated Press. Jabouri said between 42 and 45 people died, including 15 children and 10 women.

Border movements

For months, U.S. forces have waged a largely hidden war in the region in an attempt to capture foreigners who cross the largely unguarded Syrian border to join in attacks against the U.S.-led occupation. The U.S. government classifies Syria as a state sponsor of terror and last week imposed sanctions on it.

Regarding Wednesday’s attack, “our sense is that this was a legitimate military target,” said a U.S. military official in Baghdad, who spoke on condition of anonymity. “We suspect that this was a smuggler or foreign-fighter” route, the official said. “It’s our estimation right now that the personnel involved in this matter were part of the foreign-fighter safe house.”

Al-Sadr militia

In separate action, U.S. soldiers battled the Mahdi Army, a militia loyal to the rebel Shiite Muslim cleric Muqtada al-Sadr, through much of the afternoon Wednesday in Karbala. In the evening, soldiers fought al-Sadr’s militiamen in the sacred cemetery on the outskirts of Najaf after a day of relative calm.

The fighting in the two holiest cities of Iraq’s Shiite majority came a day after Grand Ayatollah Ali Sistani, the most influential Shiite cleric, called on all armed groups to leave Najaf. He also appealed to potential al-Sadr supporters outside Najaf and Karbala to ignore the young cleric’s call to join the uprising.

U.S. officials, who have charged al-Sadr with the April 2003 murder of a moderate rival cleric, had hoped Sistani’s order would defuse one of the most serious security challenges that U.S.-led forces must address before an interim Iraqi government assumes limited authority June 30. Instead, the order appeared to open new divisions among Iraqi Shiites, once largely supportive of the U.S. invasion after suffering for decades under Saddam Hussein’s Sunni Muslim-led government.

Al-Sadr supporters demonstrated in front of Sistani’s headquarters in Najaf and the shrine of Imam Ali, the city’s holiest site, which has been threatened by recent fighting. Before the afternoon fighting, Sistani supporters demonstrated peacefully in Karbala.

Hasan Azawi, an al-Sadr representative in Baghdad, issued a statement calling for Iraqis to attend a demonstration today at al-Sadr’s office in Najaf — a direct rejection of Sistani’s call not to enter the city.

Also Wednesday, the military announced the death of a soldier from the Army’s 1st Infantry Division. The soldier was killed by gunfire around 4:30 p.m. Tuesday while on patrol near Miqdadiyah, northeast of Baghdad.

Troops under attack

In a statement concerning the disputed attack in western Iraq, the U.S. military that U.S. forces came under fire during an operation in the western desert at 3 a.m. Ground troops moved against a suspected safe house used by foreign fighters when they were fired on, the statement said. A Defense Department official said U.S. warplanes provided close air support.

In the aftermath, U.S. soldiers found “numerous weapons,” large amounts of Iraqi and Syrian currency, foreign passports and a two-way satellite radio, the statement said. U.S. officials suggested that the village, 16 miles east of the Syrian border, had been a focus of intelligence efforts for some time.

Villagers shown on the video broadcasts said the attack came during a wedding celebration.

Among the first U.S. military decrees following the April 2003 fall of Baghdad was a prohibition on celebratory gunfire, an age-old custom in tribal areas across the Middle East and Central Asia. The sight of tracer bullets streaking through the night sky can lead U.S. forces to believe they are under attack.

But few Iraqis heeded the new rule. Celebratory fire rang out over Baghdad last week after the Iraqi national soccer team qualified for the 2004 Olympics.