BAGHDAD, Iraq (AP) – Gunmen sprayed grenades and automatic weapons fire in a market south of Baghdad on Monday, killing at least 50 people, mostly Shiites. The sectarian attack drew an angry protest from lawmakers who accused Iraqi forces of standing idly by during the rampage.

Women and children were among the dead and wounded in the assault in Mahmoudiya, hospital officials said.

Several witnesses, including municipal council members, said the attack began when gunmen _ presumed to be Sunnis _ fired on the funeral of a member of the Mahdi Army, a Shiite militia, killing nine mourners.

Assailants then drove to the nearby market area in the town 20 miles south of Baghdad, killing three soldiers at a checkpoint and firing rocket-propelled grenades and automatic rifles at the crowd. After the gunmen sped away, they lobbed several mortar rounds into the neighborhood, the witnesses said.

The assault occurred a few hundred yards from Iraqi army and police positions, but the troops did not intervene until the attackers were fleeing, the witnesses said. They spoke on condition of anonymity because of fear of reprisals.

The U.S. command announced that three American soldiers were killed in separate attacks Monday _ two in the Baghdad area and one in Anbar province west of the capital. At least 2,553 members of the U.S. military have died since the beginning of the Iraq war in March 2003, according to an Associated Press count.

There were conflicting casualty figures in the market attack, with a Shiite television station reporting more than 70 dead. But local police and Dr. Dawoud al-Taie, director of Mahmoudiya hospital, said 50 people were killed and about 90 were wounded.

In Baghdad, Shiite legislator Jalaluddin al-Saghir said Iraqi military authorities had ignored warnings that weapons were being stocked in a mosque near the market. He also said the local police commander refused to order his men to confront the attackers because they lacked weapons and ammunition.

Dozens of Shiite lawmakers, including followers of radical anti-American cleric Muqtada al-Sadr, stormed out of a parliament session to protest the performance of the security forces.

In Mahmoudiya, long a flashpoint of Shiite-Sunni tension, tempers boiled as frantic relatives milled about the hospital, scuffling with guards and Iraqi soldiers who tried to keep them outside so doctors could treat the wounded.

“You are strong men only when you face us, but you let them do what they did to us,” one man shouted at a guard.

The Shiite television station Al-Forat broadcast strident quotes from Shiites who blamed the attack on Sunni religious extremists. They expressed outrage that Sunni politicians could not rein in the militants.

The main Sunni bloc in parliament said the attack may have been retaliation for the kidnapping of seven Sunnis whose bodies were found Sunday in Mahmoudiya. The bloc accused Shiite-dominated Iraqi security forces of failing to control the situation.

The events also raised doubts about the effectiveness of the U.S. strategy of handing over large areas of the country to Iraqi control, while keeping U.S. troops in reserve.

U.S. troops of the 101st Airborne Division reported hearing detonations and gunfire, the U.S. command said. But Iraqi troops are responsible for security in Mahmoudiya, and American soldiers do not intervene unless asked by the Iraqis.

Four soldiers and a former soldier from the division are accused of raping and murdering a teenage girl near Mahmoudiya on March 12. A sixth soldier is accused of failing to report the crime.

The Mahmoudiya attack was part of a rising tide of tit-for-tat killings and intimidation that many Iraqis fear is the prelude to civil war. The campaign of intimidation and attacks is slowly transforming Baghdad into sectarian zones under the tacit control of armed groups that protect members of their sect and drive away others.

On July 9, Shiite militiamen swept through the mostly Sunni neighborhood of Jihad in western Baghdad, dragging Sunnis from their cars and shooting them in the street. About 50 people were slain.

Faced with such massacres, Iraqis are turning to sectarian militias to protect themselves because government forces cannot. Some Sunnis, who form the backbone of the insurgency, now say privately they want American troops to remain in Iraq to protect them from Shiite militias.

Despite the security crisis, U.S. Commerce Secretary Carlos Gutierrez came to Baghdad Monday and signed an agreement with the Iraqis to encourage foreign investment and lay the foundation for a market economy after decades of state control.

“We are convinced that Iraq is ready for recovery,” Gutierrez told reporters, later acknowledging that “clearly, security is still the No. 1 challenge.”

Also Monday, the final group of Japanese troops left Iraq and arrived in Kuwait, ending Japan’s two-year humanitarian mission in southern Iraq. The rest of the Japanese contingent, which had numbered more than 600, departed over the past two weeks.