A tentative cease-fire held in the holy city of Najaf (search) on Saturday while envoys of radical cleric Muqtada al-Sadr (search) negotiated with Iraq's interim government to end fighting that has become a key test of the country's new leaders.

But al-Sadr appeared in no mood for compromise with the government or the U.S. troops his Mahdi Army (search) militiamen have battled for nine days. In a speech from Najaf's revered Imam Ali shrine, where he is holed up with his loyalists, he exhorted his men to keep fighting elsehwere in Iraq.

"We have gotten rid of Saddam, (now) we have those who are worse than Saddam," he said Friday night. "Maybe there is a truce for a day or two. Oh brothers in the rest of the provinces, continue your jihad, maybe it (the government) wants to silence the sound of truth so don't let it."

Sadr spoke with a bandage around his right hand. Aides said he had suffered light shrapnel wounds Friday as he met with his followers near the shrine.

The violence in Najaf has spread to other Shiite areas in Iraq and become a crucial test to the interim government that took power at the end of June. While U.S. troops have done much of the fighting, they are not taking part in the cease-fiire talks.

Iraqis held demonstrations Friday in support of al-Sadr in cities across the country. In Baghdad, thousands of protesters, including some police officers, gathered outside the fortified enclave housing the U.S. Embassy and government offices and prayed in the street.

But for now, Najaf, the center of the crisis, was quiet a day after the United States suspended a major offensive. U.S. tanks were seen pulling back from some streets, and no U.S. or Iraqi forces were visible in the city center. The U.S. military said it was maintaining a loose cordon around the Old City, the cemetery and the Imam Ali Shrine.

"We've seen no violations of the cease fire since 7:30 a.m. yesterday," Maj. Doug Ollivant said. "That's good -- it shows somebody has control over them. We weren't sure before."

Thousands of Iraqis began streaming into Najaf on Saturday, after leaving their towns and cities the day before on a march to support al-Sadr. At least 1,000 people gathered outside the cleric's local office in Basra, readying to leave for Najaf later Saturday.

Aides to al-Sadr told Iraqi negotiators that the cleric was prepared to disarm his followers, but wants an American withdrawal from the holy city and amnesty for all his fighters.

U.S. troops and Iraqi officials want to ensure that any new truce would eliminate the flaws of the previous agreements, including one that ended a two-month uprising in early June. The Mahdi Army militia repeatedly violated that cease-fire, shooting at police and burying caches of weapons in Najaf's vast cemetery and using the time to regroup, according to U.S. officials and witnesses.

In Washington, U.S. Secretary of State Colin Powell said he hoped the insurgent leader would respond "in due course" to charges filed against him by Iraqi authorities. An Iraqi judge has released an arrest warrant for al-Sadr in the death of a moderate Shiite leader, Abdul Maid al-Khoel, in April 2003, two days after the fall of Baghdad. Al-Sadr denies any role in the murder.

Powell denounced al-Sadr and his militia as outlaws and said U.S. forces were "squeezing" the city in an effort to end the fighting.

One of the cleric's assistants, Ahmed al-Shaibany, described the talks as "serious and positive, but difficult."

The fighting in the city had threatened to infuriate Iraq's Shiite majority because it has surrounded the mosque, one of the holiest sites in Shiite Islam. Powell reiterated previous U.S. claims that the military had no intention of damaging the mosque.

Meanwhile, U.S. warplanes bombed the Sunni city of Samarrah early Saturday. Iraqi hospital officials said 11 people died, while the U.S. military said 50 militants were killed.

The U.S. military said several 500-pound bombs were dropped on "known enemy locations" near the city, about 60 miles north of Baghdad. The military said about 50 militants were killed in the operation, dubbed Cajun Mousetrap III, and reported no coalition casualties.

Airstrikes Friday in the volatile Sunni city of Fallujah killed eight people and wounded 16 others, said Abdel Wahab Ahmed from Fallujah hospital. The U.S. military did not immediately comment, but U.S. forces have repeatedly hit the militant stronghold 40 miles west of Baghdad with airstrikes.

Also Friday, the new U.N. envoy to Iraq arrived in Baghdad to set up the international body's first official presence here since a series of deadly bombings forced it out last year.

Ashraf Jehangir Qazi's primary task is to help Iraqis establish a constitutionally elected government by Dec. 31, 2005. He met Friday with interim President Ghazi al-Yawer and interim Prime Minister Ayad Allawi and appealed for a peaceful resolution to the Najaf crisis.

Before Thursday, the U.S. military has estimated that hundreds of insurgents had been killed in the Najaf fighting since it began last week, but the militants dispute the figure. Six Americans have been killed, along with about 20 Iraqi officers, it said.