Kurdish paramilitary forces said Monday they are complying with a U.S. Army order to cease armed patrols and that they will not act as an occupation force in Mosul, a city deeply divided between Kurds and Arabs.

Kurdish fighters (search) have been pulled back from the streets, said Bruska Shaways, deputy for military affairs of the Kurdistan Democratic Party.

Shaways, who said he and his group of some 350 fighters, called peshmergas, accompanied about three dozen U.S. special forces on the initial push into Mosul, said the time was right to start scaling back operations.

"As more American forces are coming, the 101st Airborne, there are too many soldiers here now," he said at headquarters on the banks of the Tigris River, where the yellow Kurdistan Democratic Party flag now flies over what was one of Saddam Hussein's Baath Party offices. "There is not more need for so many peshmerga here."

Aside from the Kurdish-Arab tensions, there appeared to still be low-level resistance to the U.S. presence, with attacks on three U.S. military positions Monday night.

One Iraqi was shot and killed by U.S. forces when he tried to ram into a battalion command center in the northwestern part of Mosul (search), the military reported. A second man was killed after opening fire on another command center in the northeast sector of Mosul.

In the south of the city, assailants fired on an office that gives aid and information to Mosul residents. The information center was evacuated and U.S. forces sent in six tanks. Gunfire could be heard in three parts of the city after darkness fell. It was not immediately known who was behind the attacks.

Since the fall of Mosul, Iraq's third-largest city, tensions have escalated between Arab residents and the large Kurdish minority. Kurds say Saddam sought to displace them with Arabs, taking their homes and giving them to Arabs. Some Arab families have recently been forced from their homes by Kurdish fighters.

Abandoned buildings have quickly become occupied by both the Kurdistan Democratic Party and its main rival, the Patriotic Union of Kurdistan, said Maj. Brian Pearl of the 101st Airborne Division, 3rd Battalion, 502 Infantry Regiment.

"They're trying to disperse into the sector to establish themselves -- that's what we're seeing," said Pearl, 36, of Canton, Mo.

Armed Kurdistan Democratic Party patrols had set up checkpoints and searched cars while the rival Patriotic Union of Kurdistan charged residents 500 Iraqi dinars -- about 25 cents -- at gunpoint to enter some gas stations, Pearl said. They've since agreed to stop.

At least 17 people were reported killed and others wounded two weeks ago by U.S. Marines while trying to control crowds in the city. The Army arrived last week.

Three walk-in centers opened Saturday to inform people gasoline was flowing at some service stations and propane was available starting Sunday. Soldiers and local police also began joint patrols Saturday.

Shaways said Kurds want to be represented in any interim government, but are not looking to occupy the city.

"Mosul as a city is not a Kurd city, there are a large number of Kurds but it is an Arab city," Shaways said. "So we don't want the people to think that our peshmerga are coming here to rule."

Still, on Saturday, when troops from Pearl's unit began trying to forcibly disarm the Kurdish fighters, they refused to yield. The Americans eventually backed down, giving the Kurds until Monday to restrict all armed soldiers to their own compounds.

"They know the order and the right thing to do but they just tried to push the limits," Pearl said.

Shaways said the incident was a misunderstanding. The 101st Airborne (search), he said, "thought every guy with a weapon was an enemy."

In a concession to the rival groups' leaders, each will be allowed to keep a force of eight armed bodyguards.

American commanders are now hopeful the city's disparate and sometimes hostile groups -- the Kurds and Iraqi Arabs being the largest, but also including ethnic Turks, Syrians and others -- to work together to form an interim government.