Shiite Muslim cleric Moqtada Sadr on Monday rejected an appeal by Iraq's prime minister to end the fighting in Najaf, rallying his supporters to fight with him to "the last drop of my blood" as U.S. and Iraqi forces encircled a shrine in the Shiite holy city.

Speaking publicly in the Imam Ali shrine for the first time since clashes erupted in Najaf five days ago, Sadr said it was "an honor for me to fight the Americans." Referring to his militia force, which battled U.S. and allied forces in the south during much of April and May, Sadr said: "I told the Mahdi Army that I'm one of them. I will not leave Najaf until the last drop of my blood. I will resist, and they will resist with me."

His rebuff to Prime Minister Ayad Allawi -- whom he compared to Israeli Prime Minister Ariel Sharon -- appeared to doom the Iraqi leader's efforts to bring Sadr and his followers into the political process.

"We are still trying to make some efforts to make him say yes" to requests to end the fighting in the southern city, acknowledged Georges Sada, a spokesman for Allawi. "It seems his message is the opposite."

The turmoil has spread to other parts of the country. On Monday, residents of Baghdad's restless Sadr City section rejected a government curfew, and in the southern port of Basra, a British soldier was killed in an attack.

Fighting and the threat of sabotage prompted Iraq to stop pumping oil to Basra through its vital southern pipeline, although storage tanks there can keep exports flowing for about two days, according to news services.

"We are losing a lot of money," Sada said. "We are trying to make our people understand that this violence affects the plans of reconstruction of the country."

Forty miles north of Baghdad, in Balad Ruz, explosives packed into a station wagon detonated at the home of the Diyala province's deputy governor, Aquil Hamid Adili. The blast killed six policemen and wounded 17 people, including Adili and his 9-year-old son. Adili was listed in stable condition. In Baghdad, a ranking police officer in the eastern portion of the city, Brig. Raed Mohammed Khudair, was kidnapped.

Also Monday, a roadside bomb blew up next to a bus in the town of Khaldiya, 45 miles west of Baghdad, killing four passengers and wounding four others, officials said.

The Defense Department on Monday identified two Marines and a solider killed last week in Najaf: Sgt. Yadir G. Reynoso, 27, of Wapato, Wash.; Cpl. Roberto Abad, 22, of Los Angeles; and Pfc. Raymond J. Faulstich Jr., 24, of Leonardtown, Md. The Pentagon also released the name of Spec. Joshua I. Bunch, 23, of Hattiesburg, Miss., who died Friday in Baghdad in an attack on his vehicle.

The violence around the country appeared linked to the situation in Najaf, about 90 miles south of Baghdad. Explosions and gunfire have resounded since Thursday near the shrine where the remains of Ali, son-in-law of the prophet Muhammad, are buried, and at the enormous cemetery nearby.

A Marine spokesman said insurgents had fled the cemetery after an assault on Friday. But when U.S. forces withdrew from the area, the insurgents moved back in.

"They are conducting the same tactics -- launching attacks from the cemetery and surrounding areas, only to immediately run back and seek sanctuary in the mosques and buildings surrounding the Imam Ali shrine," the spokesman said.

U.S. and Iraqi forces "will not allow them to seek sanctuary and hijack this holy cemetery from the people of Iraq," Col. Anthony M. Haslam, commanding officer of the Marines in Najaf, said in a statement. "We will not allow them to continue to desecrate this sacred site, using it as an insurgent base of operations. There will be no sanctuary for thugs and criminals in Najaf."

Iraqi and U.S. forces attempted Monday to take control of the cemetery, and officials said the area was loosely surrounded, cutting off the Mahdi Army's ability to send in reinforcements for its gunmen inside the shrine. There are about 2,000 U.S. Marines and nearly 2,000 Iraqi security forces in the area, according to military officials.

A senior U.S. military official said that American forces had refrained from attacking Sadr's fighters inside the shrine but that such caution may be abandoned if the violence continues.

"The governor of Najaf has given approval that, if necessary, these types of operations can be conducted," said the official, who spoke on the condition of anonymity. "The Mahdi militia are organizing and conducting attacks from there. This use of the holy site to conduct armed operations is contrary to international law."

An attack, especially by American forces, risks enraging Shiites further. But Sada, the prime minister's spokesman, confirmed the threat. "We don't want to make it tough in a holy city, in Najaf, with the shrines there," he said. "But at least, we can't let them make the shrines shelters and depots for weapons. It is not Islamicly accepted."

The governor of Najaf, Adnan Zurufi, declared a 24-hour cease-fire in the city, but a spokesman for Sadr rejected it and clashes continued Monday night. "We have nothing to do with the truce," said the spokesman, Ahmed Shaibani. "We didn't start the fighting. If they stop, we will stop."

Reports of casualties varied widely. A U.S. military spokesman said an estimated 360 insurgents, four American soldiers and four Iraqi security troops had been killed as of Sunday. Nineteen U.S. troops and 12 Iraqi security troops have been wounded.

Sadr's spokesmen have said the toll among militia fighters was far lower. Shaibani said five from the Mahdi Army were killed and 15 others wounded on Monday.

Maj. Ghalib Hashim Jazaeri, the police chief of Najaf, said in a telephone interview that "300 members of the Mahdi Army" had been arrested, most of them from the southern town of Nasiriyah. He said three Iranians also had been arrested "and we have confiscated brand-new weapons in boxes that carry a sign saying 'Made in Iran.' "

Sadr's Mahdi Army is estimated to number 2,000 fighters, but such figures are largely guesswork. Although a junior figure among Iraq's Shiite clerics, Sadr has won a wide following with his long-standing resistance to the presence of American forces in Iraq.

Allawi has attempted to persuade Sadr to transform his armed movement into a political party and run in elections planned for January. The prime minister made a surprise visit to Najaf on Sunday to deliver a personal appeal for an end to the fighting. But his appeal was coupled with threats that the opposition would be crushed if it did not comply.

Sadr responded with similarly tough talk Monday morning in his appearance at the Imam Ali shrine. He dismissed Allawi's visit, comparing it to Sharon's inflammatory visit to Jerusalem's Temple Mount, or Noble Sanctuary, in September 2000, when he was leader of Israel's right-wing opposition. The visit to the site, revered by Muslims and Jews, sparked violence that has stretched for four years.

"Sharon visited Jerusalem, and the Palestinian resistance got stronger after his visit. The same here. The resistance will be stronger after Allawi's visit to Najaf," said Sadr.

In Sadr City, the huge slum in Baghdad named for Sadr's slain father, the Iraqi government imposed a 4 p.m. curfew Monday to try to dampen sporadic gunfights, but the order was ignored. Armed men roamed the streets, which were crowded late into the night, according to residents there.

"This is the start of war. We are not scared to die," said Mutada Abbas, 26, who identified himself as a member of the Mahdi Army.

The crowd swelled after false rumors from Najaf that U.S. forces had attacked the shrine of Ali.

"The Americans shot the Imam Ali shrine, so now the people will fight with the Mahdi Army," said Abbas Abed Awi, 35. "This is big for us. If they shoot the shrine, we will die for Imam Ali."

"Nobody cares" about the curfew, he added. "Everyone is outside their houses. Even the children. People are watching and all of them are ready to fight on the streets."

Correspondent Jackie Spinner and special correspondent Omar Fekeiki contributed to this report.

Militiamen loyal to Shiite cleric Moqtada Sadr fire a mortar in Najaf, where fighting continued for a fifth day.