Shia Muslims came to the shrine when they heard about the clashes
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One of Iraq's holiest Shia Islamic shrines has reportedly been damaged in clashes between US troops and the forces of militant cleric Moqtada Sadr.
Correspondents say the incident in Najaf is likely to spark outrage among the Shia majority. However the US has denied causing any such damage.
The news followed overnight fighting in Najaf and Kufa which left at least five civilians dead and 19 wounded.
Meanwhile in Baghdad a car bomb exploded near the Australian embassy.
Five people were injured in the blast, which happened outside the Karma Hotel and close to an Australian military checkpoint.
In other developments:
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A rocket attack on Monday on a US base north-west of the Iraqi capital left one soldier dead and four wounded, the US military reported
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Further north, in the city of Kirkuk, Iraqi politician Ahmed Najm al-Din from the minority Turkmen community was killed as he left his office late on Monday
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The Arab TV station Al-Jazeera reported that a bridge outside the town of al-Kut between Najaf and Karbala had been blown up.
Inner gate
Mr Sadr reportedly visited the site of the attack in Najaf to inspect the damage, amid chanting from crowds.
Al-Jazeera TV showed damage to the inner gate of the shrine leading to the tomb and debris strewn on the ground.
It also showed that a veil covering the entrance to the tomb had been torn and injured people lying on the floor of the compound.
A representative of militant cleric, Ahmed Shebani, said five or six missiles had hit the building.
It was not clear who fired the missiles.
US Brigadier General Mark Kimmitt told a Baghdad news conference that coalition forces
had "no involvement" in the damage to the Imam Ali mosque.
"We have heard different reports of what caused it. Whether it was fighting between two different factions inside the city or whether it was - as reported elsewhere - Moqtada's militia fighting from the cemetery onto the area of the mosque to try to provoke outrage so they could blame it on the coalition forces," Gen Kimmitt said.
Imam Ali was the Prophet Mohammed's cousin and son-in-law
and he is the most revered saint among Shia Muslims.
The gilded dome of the shrine was damaged earlier this month.
The US says it is careful to avoid damaging holy shrines and says Mr Sadr's militia has been using them to store weapons and ammunition.
Checkpoint
In the past few days the US military has stepped up the pressure on the radical cleric in an offensive it is calling Operation Iron Sabre.
Dozens of Mr Sadr's men have been killed but both sides, it seems, are determined to fight on.
The Baghdad blast destroyed the car and left a crater in the ground
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US Army Colonel Mike Murray said the bomb in Baghdad had been placed under a blue Volkswagen about 50 metres (160 feet) from the hotel, in the central Jadiriyah district of Baghdad.
The injured included a young boy aged between 10 and 12 who was critically hurt.
The hotel is not far from a military checkpoint at the Australian embassy and Australian officials said they are investigating whether the embassy was the target.
Australia has been one of the staunchest supporters of President Bush's Iraq policy and has sent military personnel to the country.