Iraq said yesterday that its troops staged a surprise attack on Iranian forces during the night, reoccupying areas in the southern Iraqi marshes near the Majnoon oilfields.

But Iran said it smashed the attack and inflicted hundreds of casualties on the Iraqis.

A Baghdad High Command communique said the Army, supported by air, tank and artillery fire, killed hundreds of Iranian troops and recaptured several miles of land near the oilfields.

Iran had occupied parts of the man-made Majnoon islands, but Baghdad has said its forces have retaken large areas during the course of the Persian Gulf war, now nearly seven years old.

The Majnoon oilfields are thought to have reserves of at least 7 billion barrels, as much as those of Oman and Qater combined, but have never been exploited.

The Iranian news agency IRNA, monitored in London, said three commando brigades of the Iraqi 6th Corps launched the attack on marshlands straddling the border.

But IRNA said Iranian forces "employed special tactics to prevent the attacking Iraqi troops from infiltrating their positions."

A military spokesman in Baghdad also said Iraqi warplanes destroyed 10 Iranian artillery positions along the southern front while others attacked a site for U.S.-made Hawk antiaircraft missiles in the same area.

The spokesman said the jets also attacked and destroyed 65 Iranian Army vehicles on the northern front, scene of heavy ground fighting over the past few weeks.

According to IRNA, Iraqi planes bombed civilian areas in Iran's Western Azerbaijan Province, killing or wounding a number of people.

The agency said the planes bombed the outskirts of the border town of Sardasht and the township of Mir-Abad, damaging a number of houses. It gave no casualty toll.

Iran reported 60 people killed and more than 2,000 wounded in Sardasht on June 28 when it said Iraqi planes twice attacked the town with chemical weapons.

{IRNA said Saturday that Kuwait was reported to have executed three pro-Iranian extremists whose release had been set as a condition for the freeing of American hostages in Lebanon, United Press International reported from Cyprus.

{IRNA quoted the weekly al-Amal al Islami, published by Iranian-backed Iraqi dissidents, as saying Kuwaiti sources discovered the three were executed in late April. The magazine is Tehran-based.

{IRNA said the three were accused of involvement in bomb attacks against U.S., French and Kuwaiti targets in Kuwait on Dec. 12, 1983. The three sentenced to death were among 17 men convicted of the bombings.

{There was no independent confirmation of the report or official comment from Kuwait which, with American support, had rejected Islamic Jihad demands for an exchange of the 17 prisoners in exchange for American hostages.

{In Beijing, U.S. envoy Vernon Walters said Saturday that Chinese and Soviet support for a United Nations resolution designed to end the Iran-Iraq war has exceeded his expectations, according to UPI.

{Walters, who visited Moscow and Beijing as part of a trip to consolidate support for the resolution, told a news conference the United Nations now has a "real opportunity" to stop the war. "I must say that in both Moscow and here I found great understanding for our position," Walters said. "And frankly, in both places I found the general atmosphere more favorable than I expected."}