And, on a relatively peaceful day, the commander of 2,500 U.S. troops outside Najaf said he would allow time for talks before any attempt to enter the holy city to seize a rebel cleric -- which could spark a wider and bloodier uprising.

The Shi'ite cleric, Moqtada al-Sadr, called for a halt to attacks on Spain's 1,400 troops near Najaf after the new government in Madrid said it was pulling out of the U.S.-led occupying coalition.

"The attacks on Spanish troops should be stopped since they are returning to their country and as long as they don't carry out aggressions against the Iraqi people," said a statement from Sadr's office in the southern city.

Dan Senor, chief spokesman of the U.S.-led authority, told a news conference that negotiators agreed after three days of talks to work toward a real and lasting cease-fire in Falluja.

However, it is not clear how much influence Falluja officials have on the estimated 1,000-2,000 fighters in the city who have battled on despite U.S. Marines being ordered to halt offensive operations 10 days ago.

"The parties agreed that coalition forces do not intend to resume offensive operations if the persons in the city turn in their heavy weapons," Senor said.

Iraqi police and U.S. troops would start joint patrols in the city to try and restore order, he said.

U.S. forces launched a crackdown in Falluja after a spate of violence including the killing and mutilation of four U.S. contractors in the town on March 31. They encircled it and vowed to capture those responsible for that crime.

Senor said that once found they would be dealt with by the Iraqi justice system.

A curfew would start two hours later at 9 p.m. There would be unfettered access to Falluja hospital, food and medicine would be provided to isolated areas and ambulances would be allowed to move freely, he said.

"WE CAN WAIT"

On the other front, where coalition troops around Najaf have been fighting Sadr's Mehdi Army, two American soldiers were wounded in an ambush, Major Neal O'Brien said.

But, with the American military wary of enraging Iraqis by sending troops into one of the most sacred cities in Shi'ite Islam, the U.S. commander said no assault was imminent.

"Because of where negotiations are right now, we can wait," Colonel Dana Pittard said. "We still want Iraqis to solve the problem."

The U.S. army has said it wants to kill or capture Sadr, who is holed up in Najaf, and destroy his militia.

A senior coalition official said it was unclear how far negotiations by various Iraqi intermediaries had progressed.

"It's difficult to get a sense of what's real and what isn't," he said.

Lieutenant General Ricardo Sanchez, commander of the coalition forces, left open the possibility of an assault, promising his troops would be very careful if one were launched.

"We're very sensitive of the holy shrines, as we have always been when we've conducted operations in this country," Sanchez told Australian Broadcasting Corporation television.

"We'll be applying the same levels of constraint that we've always applied in operating in this country and making sure that we respect the people and that we respect their religious shrines," he said.

HIGH TOLL

The U.S. military has lost more troops in combat in the last three weeks than in the three-week war that toppled Saddam Hussein. Since March 31, 104 U.S. troops have been killed in action.