by Jay Deshmukh and Jean-Marc Mojon
NAJAF, Iraq, Aug 26 (AFP) - Aides of Iraq`s Shiite spiritual leader Grand Ayatollah Ali al-Sistani opened contacts with rebel cleric Moqtada Sadr to end fighting in Najaf as 74 people were killed in neighbouring Kufa on Thursday.
Even after a huge crowd forced their way into Najaf`s shrine calling for peace, at least one Mehdi Army fighter was shot dead and two others wounded near the Imam Alim mausoleum at around 8:00 pm (1600 GMT), medical sources said.
A 24-hour ceasefire was declared in the city as soon as Sistani arrived on the order of Prime Minister Iyad Allawi.
The local governor said hostilites would resume if a solution to the standoff against Sadr`s Shiite militia was not found by then.
The start of peace talks marked a deadly day in Najaf`s twin city of Kufa, where 74 people were killed and 376 wounded in a mortar attack on the main mosque and shooting at a march, the health ministry said.
"We have started contacts with Moqtada Sadr and in the coming hours we are waiting, hoping that we will succeed in saving the city from destruction," said Sistani spokesman Ahmed al-Khaffaf.
Sadr spokesman Sheikh Ahmed al-Shaibani, speaking very briefly to reporters, confirmed that talks were ongoing but accused the Americans of taking advantage of the truce to target Mehdi Army fighters.
"If the Americans start shooting, then you should return fire. Otherwise, you should never open fire at the Americans," said Shaibani via loudspeaker, blarred out across the shrine and beyond the walls to the fighters.
An AFP correspondent said US forces had retreated slightly and the Mehdi Army fighters were still out in the streets, patrolling their ground. Those Sadr supporters who crossed an unofficial demarcation line faced gunfire.
After a seven-hour journey, Sistani`s motorcade stopped in Al-Saad one of the few relatively smart districts of Najaf, where the elderly Iranian-born cleric went to rest in a house that police said belonged to one of his close aides.
Set back from the road in gardens behind a brick wall, the compound was surrounded by a swarm of Iraqi police and national guardsmen, who blocked off all streets leading to the district as a stream of visitors flocked to the area.
A US tank could be seen parked about 500 metres (yards) away.
"He`s in good health, but he`s tired from the trip and he cannot talk to anyone right now," said Najaf police chief Ghaleb al-Jazairi.
None of the many sheikhs coming to pay their respects following his medical treatment in London said they had been allowed to meet Sistani.
"I`m happy Sistani`s in my neighbourhood, even if it`s for a few days," said Ali Abdul Ameer, 54, gazing at the intense security detachment.
With military operations called off, an enormous crowd forced its way into Najaf`s revered Imam Ali mausoleum, which has been cut off from the outside world by heavy US bombardment and tank fire since Wednesday.
Sadr has used the shrine has the headquarters of his Mehdi Army since his spring uprising against foreign troops.
"We answered the call of Sistani who ordered us to follow to Najaf to break the siege. Police sort of tried to arrest us, but there was nothing they could do. It`s the end of the siege," said one demonstrator, Kazem Hamid.
Inside the shrine, Medhi Kadhem Ali, commander of the militia`s mortar division said US troops opened fire on fighters who had tried to retrieve dead and wounded stranded for days.
"I hope that this is the end of the battle, but we have to wait for the result of the talks," he said.
Sistani`s large, ragged convoy, was greeted by thousands of people and escorted by police and national guard patrol vehicles on the long 400-kilometre (250-mile) journey north from Basra.
Behind the vehicles containing the ayatollah and his aides, more than 1,000 cars, pick-up trucks, taxis and buses were packed with Shiite faithful and Sadr supporters of all ages, waving banners and pictures of Sistani.
The ayatollah returned to Iraq on Wednesday via Kuwait after three weeks` treatment in London for a heart problem.
His hurried return came after US forces smashed militia defences to trap hundreds of Sadr`s supporters in the Imam Ali shrine, where a dozen bullet holes were visible in its golden dome.