Updated

U.S. infantrymen engaged in fierce battles with cleric Muqtada al-Sadr's (search) militants Monday and U.S. tanks moved closer to the revered Imam Ali Shrine as the American military stepped up pressure on the insurgents to leave the holy site and end their uprising.

Late Monday, U.S. warplanes bombed the area of the Old City, and fires lit up the night sky, witnesses said. Ahmed al-Shaibany, an aide to al-Sadr, said shrapnel from the attack hit the shrine's golden dome, one of its minarets and the compound's outer wall.

The U.S. military denied damaging the shrine and said an air crew saw militants in the compound fire a rocket that clipped one of the walls and explode 10 yards outside.

"We are not doing anything that could have caused damage to the shrine," Marine Capt. Carrie Batson said.

There was no independent confirmation of damage to the shrine, but violence earlier Monday ripped a chunk out of the outer wall of the compound. Explosions throughout the day shook the Old City, which is a mix of streets and narrow, maze-like alleys at the heart of much of the fighting.

With the U.S. advance Monday, fewer al-Sadr militiamen were in the streets and some were seen leaving Najaf (search). Militant medical officials said at least two insurgents were killed and four wounded.

Al-Hakim Hospital said two civilians were killed and two others injured, but more casualties were reported in the Old City and could not be reached by emergency workers, said hospital employee Hussein Hadi.

Al-Sadr, whose Mahdi Army (search) fighters are behind the uprising, has not been seen in public for many days, and police drove around Najaf with loudspeakers declaring he had fled toward Sulaymaniyah in northern Iraq. Al-Sadr's aides denied that.

"Muqtada al-Sadr is still in Najaf and is still supervising the operations," Sheik Aws al-Khafaji, the head of al-Sadr's office in the southern city of Nasiriyah, told Al-Jazeera television.

Worries that the violence could spread brought new calls Monday from Iraq's neighbors and other Islamic countries for international intervention to end the fighting in Najaf.

In Baghdad's heavily Shiite Sadr City (search) neighborhood, which has been wracked by violence since the Najaf uprising began, an explosion killed four people and injured nine, said Dr. Qasim Saddam, director of Sadr Hospital. The cause of the blast was unclear, and the U.S. military said it was unaware of the incident.

U.S. warplanes reportedly struck the volatile city of Fallujah (search) early Tuesday. Witnesses said it was unclear what the target was, but they reported flames and smoke in southern neighborhoods.

The U.S. military, which routinely bombs what it describes as insurgent strongholds in the city 40 miles west of Baghdad, had no immediate comment.

The Najaf fighting, which began Aug. 5, has killed at least 40 Iraqi policemen, eight U.S. soldiers and dozens of civilian bystanders. The U.S. military says it has killed hundreds of al-Sadr fighters, though the militia says its casualties have been far lower.

The crisis has posed a severe challenge to the interim government of Prime Minister Ayad Allawi, who has tried to take a hard line toward insurgents causing unrest in many cities.

Government officials sent mixed messages in recent days, first threatening to raid the shrine — which would infuriate the nation's Shiite majority — then backing down and saying they were willing to wait for a peaceful solution.

Al-Sadr's aides said Friday they would turn over the shrine to Shiite authorities, but the militants still had not withdrawn by Monday amid squabbling with the religious leaders over details of the pullout.

Interior Minister Falah Hassan al-Naqib said the government would not wait indefinitely.

"Certainly there's a limit, and I think the period has started to narrow," he told Al-Arabiya television Monday. "It could be days or it could be hours. Such decisions are taken at the time, depending on the developments."

In Washington, U.S. State Department spokesman Adam Ereli said, "The government of Iraq and Prime Minister Allawi have said that the Mahdi militia should accept their terms for engaging in the political process and vacating the shrine."

He added that the Bush administration has made clear that U.S. forces will not be involved in a move against the holy sites.

Maj. Jay Antonelli, a U.S. military spokesman in Baghdad, said that in response to sniper fire and rocket-propelled grenade attacks, U.S. forces fired artillery Monday at a parking garage about 400 yards west of the Imam Ali compound and fired mortars at other sniper nests.

"No shots were fired into the mosque," he said.

Tanks approached within 250 yards of the shrine, the closest in recent days. U.S. snipers took positions on rooftops around the shrine, witnesses said. Gun battles crackled throughout the day, and planes flew overhead as explosions shook the city.

"We're not doing any offensive operations. This is all in response to them," Antonelli said.

Antonelli said militants within the shrine compound fired 120 mm mortars at the governor's office in Najaf. There were no immediate reports of casualties.

In a separate attack, two mortar shells landed in a garden outside al-Hakim Hospital, but caused no damage or casualties.

The militants see U.S. troops as unwanted occupiers and view their very presence in the streets of Najaf as a provocation, even if the soldiers do not attack them first.

The violence has hammered residents of Najaf's Old City, which has had no electricity and only spotty water service since the fighting began. Many neighborhood stores have shut down and others have been destroyed.

The streets often are deserted as many residents have fled to stay with relatives or friends in other parts of the city.

In other developments:

— In New Haven, Conn., Alan Garen, father of freed American journalist Micah Garen, indicated his son would return to the United States, possibly this week. Micah Garen had said after being released Sunday in Nasiriyah following nine days as a hostage that he hoped to stay in Iraq to pursue his documentary project about the looting of archaeological sites.

— In Baghdad, assailants fired a rocket-propelled grenade at a U.S. patrol on Monday night, killing one soldier and wounding two others, the military said. The troops were evacuated to a U.S. military hospital, where one of the soldiers succumbed to his wounds.

— Assailants in Tikrit, 80 miles north of Baghdad, killed one Turkish citizen and two Iraqis along a road heading to the northern city of Kirkuk late Sunday, Maj. Neal O'Brien, a spokesman for the U.S. Army's 1st Infantry Division, said Monday.

— In Kirkuk, Sharzad Hassan, 31, an official with the pro-U.S. Patriotic Union of Kurdistan, was killed by unknown attackers late Sunday in a drive-by shooting, police officer Sarhat Qadir said Monday.