The attack on the soldier from the US Army's 101st Airborne Division occurred in the city of Mosul, Brig. Gen. Mark Kimmitt said at a news briefing in Baghdad.

Earlier Monday, witnesses in Mosul, about 250 miles north of Baghdad, said dozens of US troops cordoned off the city's central neighbourhood of al-Muthana, inspecting cars and searching people walking in the streets. At least three helicopters flew overhead at low altitude.

"We are looking for bad guys," a soldier said without elaborating.

In Mosul yesterday, a soldier from the 101st Airborne Division died and two others in his unit were wounded when rebels detonated a bomb as their convoy drove by.

The US military said troops north of Baghdad on Also Monday seized $1.9 million in cash and false identification documents in a raid targeting the suspected financier of insurgents.

US troops in Samarra seized the cash and arrested one person in the operation Sunday, said Maj. Josslyn Aberle, spokeswoman for the 4th Infantry Division.

"They didn't catch the original target but they detained one of his relatives and seized the money," Aberle said.

Samarra, some 70 miles north of Baghdad, was the site of heavy fighting Nov. 30 between Iraqi guerrillas and US soldiers who were delivering new Iraqi currency to local banks.