U.S. tanks rumbled Friday into the vast cemetery in the southern city of Najaf, one of Shiite Islam's most sacred places, in pursuit of anti-occupation insurgents loyal to the rebel cleric, Moqtada Sadr.

In images broadcast across the Middle East on Arabic satellite channels, two U.S Army Kiowa helicopters fluttered above the sea of ochre and tan tombs on the edge of the city. Olive-green Abrams tanks, part of the 1st Armored Division, appeared to fire into the tombs. Plumes of gray and black smoke puffed up from between the grave markers.

Insurgents carrying automatic weapons and rocket propelled grenade launchers could be seen scurrying among the tombs.

"The cemetery lost its holiness in the early hours of today when the U.S. forces started to attack," said Khalid Farhan, 55, who owns the Thulfiqar Hotel in downtown Najaf. "Many of the graves have been destroyed. But we can say that people are dying and nice buildings are being destroyed also to day. Who cares right now about graves?"

Maj. Gen. Martin Dempsey, commander of the 1st Armored Division, said in a live interview on CNN that his forces, while still trying to avoid the most "sensitive" sites in Najaf, was forced to deploy tanks around the cemetery after his troops came under heavy mortar fire.

He said he had no immediate plans to arrest Sadr unless troops happened to encounter the cleric, who was reported early in the day to be six miles away in Kufa delivering sermon denouncing the U.S. and Britain.

The fighting, which coincided with skirmishes in the holy of city of Karbala farther north, represented some of the most aggressive tactics yet employed by U.S. forces against the Mahdi Army, as Sadr's Shiite militia is known.

It also appeared to signal the demise of talks to end the standoff by a negotiated agreement, something U.S. officials had hoped to accomplish through a group of mainstream Shiite leaders who appear equally incapable of corralling the young cleric.

Shiite leaders fear Sadr, who is wanted by U.S. forces for his alleged part in the murder last year of a rival Shiite cleric, is putting Najaf's gold-domed Shrine of Ali in danger by using the city as sanctuary. They have called on his to leave the city, where he has been holed up since early April, and disarm his militia.

These leaders have also called for the withdrawal of U.S. forces from the city, and a greater willingness on the part of U.S. officials to set aside the arrest warrant in order to resolve the standoff. Neither side has heeded those calls.

The military push Friday morning appeared to signal a strengthened U.S. resolve to stop the Shiite insurrection before it gains more momentum outside the south, the region most receptive to the U.S. occupation.

At the moment, Sadr's resistance poses among the most significant threats to U.S. plans for a smooth handover of limited authority to an interim Iraqi government, scheduled to take place June 30.

But rooting out Sadr's thousands-strong militia from the holy cities also poses political problems for U.S. officials, who say they do not want to be seen attacking Shiite Islam's holiest places in a region deeply suspicious of their intentions. The cemetery at Najaf, a maze of streets, passageways and tombs, vaults and mausoleums, is one of the world's largest burial places. For centuries, Shia Muslim families by the millions have made pilgrimages there to lay their dead to rest.

Judging by the combat today, U.S. military officials appear, at least in the short term, to have set aside those concerns to achieve lasting results against the militia. U.S. tanks wheeled inside the city center today, near the sacred Shrine of Ali, Shiite Islam's holiest site.

Over the past three days, U.S. have also fought pitched gun battles with insurgents near the Shrines of Hussein and Abbas in Karbala - mosques the insurgents' have sought to use as refuge.

Witnesses said the Thulfiqar Hotel came under fire this morning as U.S. tanks rattled through the city streets.

Reporters employed by the news services Reuters, Agence France Presse, and the Associated Press, as well as the Washington Post and the U.S.-funded Hurra satellite channel, reside at the hotel.

What witnesses said were tank rounds struck the roof, the lobby, and a courtyard behind the building, sending cameras toppled and reporters ducking for cover. Some of them suffered minor injuries. "They first made warning shots," said Farhan, the owner, who blamed U.S. tanks for the attack. "When the reporters wouldn't move [from the roof] they shot ."

An aide to top Shiite cleric Grand Ayatollah Ali al-Sistani called on Friday on U.S. forces and militiamen of rebel cleric Moqtada al-Sadr to cease fighting and leave Najaf, the Reuters news service reported from Dubai.

Ayatollah Mohammad Baqer al-Mohri, Kuwait-based aide to Sistani, said the fighting was spreading fast and he feared for holy sites and for Sistani's life, Reuters said.

"The fighting is getting closer to the house of the Grand Ayatollah. We fear that his life will be in danger," he told Reuters by telephone.

"We ask the coalition forces and (Sadr's) Mahdi militia to quit the holy city Najaf," he said. He urged U.S. forces not to violate the sanctities of Najaf or damage its shrines and cemetery where religious clerics were buried.

Sadr, in his sermon, described President Bush and British Prime Minister Tony Blair, a key ally of Washington in the occupation of Iraq, as "the heads of tyranny."

Sadr said the two leaders had paid attention to what he described as the "fabricated" case of Nicholas Berg, an American civilian who was beheaded by militants, and had ignored the suffering of Iraqis in prisons controlled by coalition troops.

The cleric also condemned Iraqis who cooperate with the Americans and "are willing to execute the occupiers' orders."

Fred Barbash reported from Washington. Special correspondent Omar Fekeiki contributed to this story.