BAGHDAD (AFP) - Two rockets slammed into a Baghdad hotel used by foreign journalists and contractors even as militiamen loyal to a radical Shiite cleric offered to surrender weapons in return for concessions.
The attack came as US and Iraqi forces pressed their assault on a rebel stronghold in a drive to crush a violent insurgency that has plagued Iraq since last year`s war and claimed two more US soldiers` lives in the past 24 hours.
But the pretext for the invasion itself was undermined by a US report showing that toppled president Saddam Hussein had no banned weapons at the time or was working on developing any.
The rockets hit the Sheraton Hotel, followed by gunfire, but there were no immediate reports of any casualties, officials and witnesses said.
"Two rockets did hit the hotel. It looks like they may have been fired from close range," said US military spokesman, Major Philip Smith.
A guest at the heavily fortified hotel said: "I was working at my computer when I heard loud explosions followed by some gunfire."
Fire was seen blazing from the Sheraton after the attack at about 7:00 pm (1600 GMT), although the guest said the situation calmed later.
Desperate to stamp out pockets of resistance, the US military said 17 suspected insurgents were captured in the towns of Haswah and Iskandariyah, immediately south of Baghdad, during joint raids with Iraqi forces.
The arrests brought to 60 the number of those detained since Tuesday`s start of an operation dubbed "Phantom Fury" which was still underway.
More than 1,300 marines and soldiers, and 800 Iraqi military and police personnel, were involved in the operation, which comes less than a week after a massive offensive to retake the city of Samarra, north of Baghdad.
Four marines, three Iraqi national guardsmen and three civilians have been wounded in the fighting so far, according to the military.
Elsewhere, a US soldier was killed and his interpreter wounded in a roadside bomb attack Thursday near the northern oil refinery town of Baiji, after another soldier was killed and two wounded late Wednesday in a bomb attack on their convoy near Fallujah, an insurgent enclave west of the capital.
In other violence, an official with US-funded Iraqi television was gunned down in the main northern city of Mosul, police said.
The US-backed government of Prime Minister Iyad Allawi maintains that it wants to pursue peaceful avenues to resolve a stand-off with rebels in strongholds such as the Shiite Baghdad slum of Sadr City and the Sunni Arab bastion of Fallujah.
In a positive development on that front, militiamen loyal to Shiite cleric Moqtada Sadr offered to surrender heavy and medium weapons in return for the release of prisoners and a role in Iraq`s political process, a Sadr spokesman said.
"We are ready to lay down our heavy and medium-sized weapons in return for the release of all those imprisoned from our movement, a commitment that members of our movement will no longer be pursued and the restoration of basic services to areas like Sadr City," Sheikh Abdul Hadi al-Darraji told AFP.
He said Sadr`s movement was willing to take part in nationwide elections promised for January as long as they were "free of US influence and overseen by international monitors."
Allawi has pledged that the vote would take place on time despite concerns about the insurgency, which out-gunned by US military might, has resorted to car bombings and hostage-takings to derail the US-backed political process.
The kidnapping crisis refused to disappear, with an Internet statement from a group accused of Al-Qaeda links claiming to have snatched a "Kurdish spy", while the family of a Jordanian hostage struggled to raise a half-milion-dollar ransom and Allawi hinted about fresh developments in the case of a British captive.
Meanwhile, a US report stating Saddam had no weapons of mass destruction was seen by most Iraqis as further proof that the coalition went to war under false pretences, with some regarding it as a potential basis for compensation claims.
"All the information available before the war showed that (president) Saddam Hussein had put an end to his (weapons) programme," Iyad al-Samarrai from the Iraqi Islamic Party told AFP.
"These weapons were used as a pretext by the US and British governments to invade Iraq," said the Sunni politician, whose party was oppressed under the former regime and can not be suspected of pro-Saddam leanings.