Shiite Muslim (search) group demanded Thursday that U.S. troops withdraw from a Baghdad neighborhood within 24 hours, a day after American forces fired on thousands of protesters in the Shiite enclave and killed at least one person.

A statement distributed in Sadr City said American forces "deeply regret" what happened and described it as a mistake. Later, Lt. Gen. Ricardo Sanchez, commander of coalition forces in Iraq, said troops try to keep Iraqi culture in mind but must remain aggressive.

In the southern city of Basra (search), a roadside bomb killed one British army medic and wounded three others riding in an ambulance, British military spokesman Capt. Hisham Halawi said. The killing was the first British combat death in nearly two months.

British troops controlling the south have seen little of the guerrilla insurgency that has plagued American forces in central Iraq — though there has been some unrest: Basra residents rioted over the weekend over electricity cuts and gas shortages.

Eight Britons have been killed in combat since May 1, President Bush declared major fighting over. In the same period, 60 American soldiers have died in guerrilla attacks, blamed on mainly Sunni followers of Saddam Hussein (search).

The protest in Baghdad on Wednesday erupted when thousands of Shiites in the neighbhorhood of Sadr City gathered around a telecommunications tower where they said American forces in a helicopter tried to tear down an Islamic banner.

U.S. military spokesman Sgt. Danny Martin said Wednesday the banner was apparently blown down by rotor wash from a Black Hawk (search) helicopter. He said American troops killed one person and wounded four after a rocket-propelled grenade was fired at them. No U.S. soldiers were reported hurt.

"What occurred was a mistake and was not directed against the people of Sadr City," said a statement signed by Lt. Col. Christopher K. Hoffman of the 2nd Squadron, 2nd Armored Cavalry Regiment. The document, in English, was being distributed in the sprawling slum Thursday. "I am personally investigating this incident and will punish those that are responsible."

Amateur video obtained by Associated Press Television News showed a Black Hawk helicopter hovering a few feet from the top of the telecommunications tower and apparently trying to tear down the banner. Later, U.S. Humvees (search) drove by and the crowd threw stones at them. Heavy gunfire could be heard and demonstrators were seen diving to the ground.

Sanchez, commander of coalition forces in Iraq, insisted the rotor wash blew down the banner, and said coalition troops try to keep Iraqis' "culture and sensitivities" in mind.

"Our intent is not to alienate the Shiite people," he told reporters. "Apparently, the helicopter blew down the flag or somehow the flag was taken down, and we are taking steps to ensure that doesn't happen again."

"There is no policy on our part to fly helicopters to communication towers to take down flags," Sanchez added.

"What I will tell you is, we've got a mission that we've got to accomplish here in the country," he said. "We'll let the investigation ... run its course, and then if it was a mistake, I'll come back and tell you whether it was or not."

Some Sadr City residents seemed calmed by the U.S. apology.

"I think that this minor incident and misunderstanding is over now. Most of the people are accepting the apology. We will not forget that it was the U.S. soldiers who liberated us from Saddam (Hussein)," said Abid Ali, an auto repair shop owner.

Al-Sadr, a Shiite religious group, demanded that the U.S forces halt all helicopter flights over the neighborhood, give an official apology and provide compensation to victims of the shooting, said Qais al-Khaz'ali, a representative of the group in Sadr City.

Al-Khaz'ali said in a statement the group was giving U.S. forces a one-day ultimatum to meet the demands, "otherwise we are not responsible for whatever reactions the U.S. soldiers might face if they entered the city."

"We urge you (the people of the city) to resort to peace until our demands are met. ... Nobody is allowed to carry weapons," the statement said, calling the Americans tyrants and troublemakers.

Al-Sadr is led by Muqtada al-Sadr, the son of a revered Shiite ayatollah who was killed by Saddam's regime in 1999. Al-Sadr, who is based in the holy city of Najaf, has strong influence in Sadr City, particularly among poor and unemployed young men.

"We're peaceful people, but one edict (from the imams) and the entire American army will become our prisoner," said Hassan Azab, a member of the local district council.

Hoffman's statement said the number of U.S. helicopters flying over the slum and the number of patrols in the eastern Baghdad neighborhood, formerly known as Saddam City, would be reduced.

Also Thursday, Sanchez said that U.S. forces had discovered three major ammunition caches in the previous 24 hours.

He also told of a growing problem of oil smuggling. He said about $200,000 worth of oil was being stolen each day and smuggled across the southern border. He said some of the 15 breaches of oil pipelines since late May had been done by smugglers trying to tap into the flow.

Iraq began pumping crude oil from its northern oil fields Wednesday for the first time since the war.

Iraq sits atop the world's second-largest proven crude reserves, and oil exports are vital to its postwar reconstruction and the success of U.S. efforts to implant democracy in the country. Before the war halted Iraq's oil production, the country pumped around 2.1 million barrels a day, most of it for export.

Analysts said it was unclear how reliable the flow of oil from fields near the northern Iraqi city of Kirkuk might prove to be.

Saboteurs and looters have dogged efforts to rehabilitate the 600-mile pipeline from Kirkuk to the Turkish city of Ceyhan. The lack of storage and export facilities forced the Iraqis to re-inject much of the oil back into underground reservoirs.

Guerrillas killed two American soldiers, the military reported Wednesday, while two Iraqi civilians were killed after attacking U.S. soldiers in separate incidents north of Baghdad.