BAGHDAD (Reuters) - Snipers held rooftop positions as masked Sunni Arab insurgents said they were gearing up for another open street battle with pro-government Shi'ite militiamen in Baghdad's Adhamiya district on Tuesday.
The Arab Sunni stronghold is still feeling ripples from overnight clashes on Monday that appeared to be the closest yet to all-out sectarian fighting.
It's a reality that has Washington scrambling to avert civil war as Iraqi politicians struggle to form a government four months after parliamentary elections.
A U.S. military spokesman said 50 insurgents attacked Iraqi forces in the middle of the night in a seven-hour battle that killed five rebels and wounded an Iraqi soldier.
Fighting was so fierce that U.S. reinforcements were brought in to the northern district, home to some of Iraq's most hardcore Sunni guerrillas and the Abu Hanifa mosque, near where Saddam Hussein was last seen in public before going into hiding.
Sporadic fighting continued on Tuesday.
"There are six people among our dead and wounded. Just half an hour ago a sniper killed Ali," said Mohammad, a 28-year-old Adhamiya resident, of his friend.
While the February bombing of a Shi'ite shrine pushed Iraq to the edge of civil war and left hundreds of bodies with bullet holes and torture marks on the streets, the scenario in Adhamiya is more alarming, despite fewer casualties.
It appeared to be the first example of a large-scale, open sectarian street battle in the capital, if not all of Iraq.
The boldness of the attack was a stark reminder of the security nightmare that will challenge the new government, which will face a Sunni insurgency that has killed many thousands of Shi'ite security forces and civilians.
"Today at noon a group of army soldiers came near the Abu Hanifa mosque and a sniper went on top of the roof. We managed to kill him with a grenade. I destroyed three of their vehicles with roadside bombs," said another rebel.
Washington hopes training will improve the performance of Iraqi forces and enable U.S. troops to start heading home.
But as the confusing Adhamiya fighting illustrated, it's hard to tell who is wearing Iraqi military uniforms, complicating the task of stabilising the country.