Militants were withdrawing from the streets and shops were reopening on the first day of a cease-fire between Shiite extremists and U.S.-backed Iraq (web|news) i forces following two months of intense clashes. Authorities in Baghdad's Sadr City reported no violence Sunday.
"Today, people are very happy and very optimistic," said Sadiq Jaafar, a 30-year-old father. "Last night for the first time in more than 40 days we were able to sleep without being woken up by explosions or gunfire."
The government said it retained the right to chase wanted militants and search houses in order to confiscate weapons. The U.S. military has made no comment on the reported cease-fire.
Thousands of civilians have fled their homes in the teeming slum - home to nearly 40 percent of Baghdad's population - and aid groups said some areas are desperately short of food and medicine after seven weeks of street battles.
Followers of anti-American cleric Muqtada al-Sadr, who was apparently instrumental in brokering the cease-fire, distributed food in the neighborhood Sunday, residents said.
The bulk of al-Sadr's 60,000-strong Mahdi Army is not believed to have participated in the clashes, instead adhering to a general cease-fire ordered by al-Sadr last August. The violence is blamed on splinter groups believed to be acting on their own. Al-Sadr has directed his supporters to only fight when attacked.
Prime Minister Nouri Al-Maliki has called on al-Sadr to disband the Mahdi Army and vowed to disarm its members.
"We have concerns about this agreement," a senior commander of the Mahdi Army, speaking on condition of anonymity for security reasons, said Sunday. "When U.S.-led forces enter the area, we fear that they will pursue us."
The commander spoke by telephone from the most troubled southern part of the district, where U.S. and Iraqi forces are building a barrier - reaching up to 12 feet high - to isolate it and disrupt supply and escape routes for militants.
During the clashes, Shiite extremists fired rockets or mortars from the area toward the heavily fortified Green Zone, housing the U.S. embassy and much of the Iraqi government offices. They often fell short, killing or wounding civilians in downtown Baghdad.
The latest conflict flared in late March after al-Maliki ordered a crackdown on armed Shiite factions in the southern city of Basra, the nation's second-largest urban area. Mahdi fighters quickly rose up in Basra and Sadr City, their stronghold in Baghdad.
Meanwhile, the U.S. military on Sunday said four people, including a woman and a child, were killed in an operation against al-Qaida (web|news) in Iraq near the northern city of Mosul on Saturday.
The military regretted killing "civilians" in the operation against what was described as associates of foreign al-Qaida fighters. The woman and the child were riding in the same vehicle with the gunmen, it said.
Iraq's security forces on Saturday launched a new operation against al-Qaida in Mosul, which was considered the last important urban staging ground for al-Qaida in Iraq after losing its strongholds in Baghdad and other areas during the U.S. troop "surge" last year.
About 140 people have been arrested in raids and some 120 roadside bombs were seized in a house in western Mosul, a police official, speaking on condition of anonymity because he was not authorized to speak to the media, said Sunday.
The military on Sunday also announced that one U.S. soldier was killed when the vehicle he was traveling in rolled over near al-Asad, home to the second largest air base in Iraq.
Sunday's announcement raises the number of the U.S. military losses in Iraq to at least 4,075 since the Iraq war started in March 2003, according to an Associated Press count.
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Associated Press writers Qassim Abdul-Zahra and Bushra Juhi in Baghdad contributed to this report.
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