by Sammy Ketz
NAJAF, Iraq, Aug 20 (AFP) - Shiite militiamen holed up in the Iraqi holy city of Najaf handed over the keys of their stronghold to aides of their faith`s top cleric Friday but denied they had capitulated in their 16-day standoff with US-backed security forces.
The handover of the keys to representatives of Grand Ayatollah Ali al-Sistani appeared to provide a face-saving way out of the crisis for militia leader Moqtada Sadr after his supporters earlier scoffed at government claims he had surrendered control of the Imam Ali shrine to Iraqi police.
"The keys were handed to the office (in Najaf)," Sistani spokesman Sayed Murtadha al-Kashmiri told AFP in London where the top cleric has been receiving medical treatment.
In Najaf, Sadr`s spokesman Sheikh Ahmed al-Shabani confirmed the handover.
"The process of handing over the shrine has been completed," he said.
"But there is some technical process that is going on, like estimating the value of assets of the shrine, which includes gold, money and furniture."
Asked if the militiamen would now leave the mosque compound, he said: "We are staying in the shrine as pilgrims, but if we were asked to lock the shrine, we would vacate it."
Sadr has repeatedly baulked at demands from Iraq`s US-backed caretaker government that he hand control of the mosque compound to a police force he regards as a US tool.
Sistani, on the other hand, still commands enormous respect among Shiites across the political spectrum despite a reputation for moderation that has won plaudits from the US-led coalition.
The symbolic handover came after a day of confusion in which Iraqi government officials had insisted against all evidence on the ground that police had entered the mosque compound and detained several hundred militiamen.
An AFP correspondent in the shrine said he had not seen a single policeman.
On the contrary, he said fighting continued sporadically on the south side of the Old City between the militiamen and US-backed forces that have surrounded the shrine compound.
In Washington, a US defence official also strongly rejected the claims of Iraqi spokesmen.
"Not a lick of truth to it," he said. "We are still outside of the shrine, and so are the Iraqi police."
It was unclear why government officials in Baghdad had so wildly overstated the situation on the ground.
"The Iraqi police entered the mosque to discover 500 men with light arms who were prepared to surrender," interior ministry spokesman Sabah Kadhim had told CNN.
"We, in cooperation with the appropriate religious authorities, were able to restore control without any fight and help the people inside."
The spokesman suggested Sadr might have slipped away during the night, but the claim was vigorously rejected by a spokesman for the cleric who insisted he "will not leave Najaf except (through) martyrdom."
The uncertainty in Iraq did nothing to help nervous world oil markets. New York`s main contract soared in opening trade to a record 49.40 dollars a barrel.
The benchmark contract, light sweet crude for delivery in September, surged 70 cents to 49.40 dollars a barrel within five minutes of the start of official trade.
In the main southern city of Basra, the British military said the number of security guards around key oil infrastructure had been stepped up after Sadr`s militiamen torched the offices and warehouses of the South Oil Company.
"The fire at the South Oil Company has been dealt with and there is no effect on oil production. The number of security guards around the oil infrastructure has also been increased," a spokeswoman said.
The US-led coalition also announced that Iraq`s fledgling air force had begun work patrolling key oil infrastructure with maiden flights by two Australian-made reconnaissance aircraft after training by Britain`s Royal Air Force.
"These flights are meant to protect the oil installations, power lines and our borders from enemies," an Iraqi commander, identified only as Colonel Abed, was quoted as saying.
In the capital`s main Shiite neighbourhood of Sadr City, the US military said a three-day offensive against Sadr`s militiamen was continuing in conjunction with Iraqi security personnel.
The health ministry said 10 people had been killed and 79 wounded in the 24 hours to Friday morning.
The US military said two marines had been killed and two wounded since the operation began on Wednesday.
North of Baghdad, in the Sunni insurgent bastion of Samarra, two US soldiers were killed when a makeshift bomb hit their patrol on Friday evening.
In Fallujah, another Sunni stronghold west of the capital, two Iraqis were killed and 11 wounded, including three women and a child, in twin US air strikes, a doctor said.
In Rome, the foreign ministry announced that Enzo Baldoni, correspondent for the Diario della Settimane newspaper, had gone missing in Iraq, although the weekly`s editor insisted there was no cause for alarm.
An Islamic militant group, the Army of Ansar al-Sunna, meanwhile announced in a statement posted on Islamist websites that it had kidnapped 12 Nepalese.
A senior foreign ministry official in Kathmandu evening said the Nepalese government had no information about the abductions.