NAJAF, Iraq, Aug 23 (AFP) - US aircraft on Monday bombed the vast cemetery in Najaf, where Shiite Muslim militiamen have been hunkered down, while sporadic clashes continued to flare around the holy Iraqi city`s revered shrine.
An AFP correspondent saw dense, black smoke spewing into the sky above the enormous Valley of Peace burial ground and heard a deafening explosion shortly after 2:00 pm (1000 GMT) as a US plane flew overhead.
Another smaller explosion was heard minutes later from the same area.
Sporadic gunfights and mortar attacks continued to reverberate through the Old City, although no US tanks could be seen in the immediate surroundings and there were fewer militiamen than usual around the mosque.
Supporters of radical cleric Moqtada Sadr said earlier that an American helicopter had fired a missile into the outer western wall of the mosque compound. The US military denied that the shrine had been targeted.
An AFP correspondent saw a dent in the wall measuring about one metre (three feet) square and 30 centimetres (one foot) deep, with rubble and spent parts of a rocket littered on the marble floor.
"It was around 11:00 pm to 11:30 pm (1930 GMT). Two rockets were fired from an American Apache. One hit the western wall of the shrine and the other a nearby hotel," said Sadr official Sheikh Ali Hussein Ali.
The hotel is a known resting place for captains in the Mehdi Army.
A military spokesman denied that the shrine -- one of the holiest in Shiite Islam -- had been targeted.
"US forces responded to hostile fire, but the fire was not directed at the shrine. It did not hit the wall or any other holy site in the area," he said.
An AFP correspondent said another brief gunship raid was launched around 2:00 am (2200 GMT).
One person was killed and three wounded in overnight violence, said a doctor at the Imam Ali`s clinic, with another four patients brought in since daybreak.
In the shrine`s courtyard, dozens of militiamen and civilians turned towards the mausoleum itself to chant repeatedly "Moqtada We Are With You", "Imam Ali We Are With You".
The ongoing violence further threatened a deal for Sadr`s militia to leave the mosque after a tense two-week-old standoff, as differences remained between Shiite leaders on the procedure to hand over the keys of the compound.
Damage to the holy site could scupper efforts to end what has been the worst crisis since sovereignty was handed over to Iraq on June 28 and risk sparking the anger of the country`s Shiite majority.