Just one day after U.S. officials announced that a fragile cease-fire in Fallujah (search) was being extended, Marines were engaged Monday in an intense firefight with insurgents in a northern district of the besieged Iraqi city.

One soldier was killed and eight more were injured while battling around a Fallujah mosque Monday, officials from the U.S. coalition said. Eight militants were also killed.

Two more soldiers were killed and five wounded Monday after an explosion leveled part of a building as U.S. troops searched it for suspected "chemical munitions" on Monday, Brig. Gen. Mark Kimmitt told reporters. Afterward, a cheering mob of Iraqis looted their wrecked Humvees, taking away weapons, a helmet and a bandolier.

Kimmitt didn't say what sort of chemical munitions were believed to be produced at the site. After the blast, there was no sign in the area of precautions against chemicals.

"Chemical munitions could mean any number of things," including smoke grenades, he said.

Some Baghdad residents said the building that exploded Monday was a perfume factory, while others said it had once been a scrap metal workshop that repaired weapons and recycled old ammunition.

In Fallujah, U.S. military officials say coalition troops came under fire from insurgents and when they returned fire, mortars reportedly hit a mosque in the northwest edge of the city.

Under the Geneva Conventions (search), firing upon a mosque or holy site is prohibited unless the attack is in self-defense. Insurgents have been using mosques in Fallujah to take refuge in while firing upon coalition troops.

Monday's fighting in Fallujah sent two large columns of heavy black smoke over the northern Jolan district, a poor neighborhood thought to have a large concentration of Sunni insurgents. Explosions rang out, along with the sound of mortars and heavy machine guns.

The battle began when U.S. troops came under fire by rocket-propelled grenades from a mosque in a northwestern neighborhood, Kimmitt said.

The Americans were pinned down by fire and called in support from helicopter gunships in the ensuing gunbattle. The mosque was damaged in the fight, Kimmitt said.

Besides the one soldier killed, eight were wounded, Kimmitt said. He did not give their nationality, though no troops other than Americans are known to be involved in the Fallujah siege.

"I am very proud of my men. They fought like lions," said Capt. Douglas Zembiec.

The fighting came a day after U.S. officials announced a fragile cease-fire would be extended for two days and that political efforts at a resolution would continue, backing off warnings that U.S. Marines could launch a full-fledged offensive in the city within days.

As part of the extended cease-fire, Marines are to begin joint patrols in Fallujah with Iraqi security forces -- a measure aimed at showing some degree of control without launching a new assault. Marines began training Iraqi security forces to join them on patrols, due to start by Thursday.

Marine Lt. Col. Brennan Byrne said patrols coming under fire wouldn't necessarily spark a renewal of a general U.S. offensive.

"We're perfectly happy to move down the street, destroy a bad guy over here and just continue on with the patrol," he said.

Baghdad Blast

Asked about reports that the raid team included members of the Iraq Survey Group (search) - the U.S. team searching for weapons of mass destruction in the country - Kimmitt said only: "The inspection was by a number of coalition forces."

He said the owner of the site was "suspected of supplying chemical agents" to Iraqi insurgents, but did not elaborate.

The Baghdad explosion occurred as U.S. troops broke into the building in the northern Waziriya district. The front half of the one-story building was leveled, setting ablaze four Humvees parked outside.

A U.S. soldier was seen being taken away on a stretcher, her chest and face severely burned. Witnesses reported other U.S. casualties taken away in ambulances. Several Iraqis were pulled out of the wreckage, including a woman who wept as she was carried over a man's shoulder.

Iraqis stripped the Humvees of equipment, one carrying a heavy machine gun, another waving a U.S. helmet. One man sported military headphones.

"This is for the madman Bush, for the madman Bremer!" said one youth, waving a rifle and referring to President Bush and the top American administrator in Iraq, L. Paul Bremer.

Battle for Najaf

In Najaf, about 200 troops and military police rolled into the Spanish base. The move deploys U.S. troops within the Najaf urban area for the first time since massing outside the city earlier this month to put down the Al-Mahdi Army militia of radical anti-U.S. Shiite cleric Muqtada al-Sadr (search).

The golden domes of the Shiite shrines at Najaf's center - a no-go zone for the Americans - were visible from inside the compound.

But Bremer said weapons were being stockpiled in mosques, shrines and schools in Najaf and, in a message directed to residents, warned, "The coalition certainly will not tolerate this situation."

Bremer's spokesman, Dan Senor, said the mosques must be "made safe immediately" but would not elaborate on what the coalition would do. He noted that in the case of military action, "those places of worship are not protected under the Geneva Convention" if they are used to store weapons.

Overnight, al-Sadr's forces shelled the base with 21 mortars, and one Salvadoran soldier was wounded, said Col. Pat White, commander of the U.S. 2nd Battalion, 37th Armored Regiment.

Spanish troops at the base are due to leave within days, and the Americans moved in to ensure al-Sadr militiamen did not overrun the site. He said it was not an offensive operation.

Phil Kosnett, of the U.S.-led coalition authorities in Najaf, said businesses are open part time, most schools are closed and the local government is mostly shut down.

"We continue to be mortared every night ... talk of a cease-fire is ludicrous," Kosnett said.

Shiite militias remain a threat in other southern cities, and insurgents in Karbala fired at Bulgarian President Georgi Parvanov's motorcade Sunday as he made a brief visit to Iraq. The president's security detail fired back, the attackers fled and no one in the motorcade was hurt.

U.S. troops will take over security duties across Najaf and Qadisiyah provinces around May 27, said Polish Col. Robert Strzelecki, spokesman of the multinational troops that control those provinces and three others.

Spain, Honduras and the Dominican Republic -- under the Polish-led force -- have been patrolling Najaf and Qadisiyah.

Last week, new Spanish Prime Minister Jose Luis Rodriguez Zapatero ordered Spanish troops home as soon as possible. Honduras and the Dominican Republic decided to pull their forces soon afterward.

Zapatero's Socialist party beat Jose Maria Aznar's conservative Popular Party in March 14 elections, just three days after commuter-train bombings in Madrid that killed 191 people and injured more than 2,000.

"The government has taken the road of appeasement, a road that history has shown to be the worst possible when dealing with threats," Aznar wrote in a column published Monday by the Madrid-based newspaper ABC.

Meanwhile, Iraq's U.S.-picked leaders approved a new flag, dumping the Saddam Hussein-era colors and slogan "God is great" and introducing symbols of the Tigris and Euphrates rivers.

The new flag is white, with two parallel blue strips across the bottom representing the rivers and a yellow stripe between them representing Iraq's Kurdish minority. Above the stripes is a blue crescent representing Islam.

The Associated Press contributed to this report.