BAGHDAD, Iraq (AP) – Iraqi officials said Monday that American-backed Iraqi troops had targeted a heavily armed religious cult called “Soldiers of Heaven” in a weekend battle that left 200 fighters dead, including the group’s leader, near the holy city of Najaf.

Both Mohammed al-Askari, the defense ministry spokesman, and an Iraqi military commander in charge of the Najaf area said 200 terrorists were killed and 60 wounded, lowering previous estimates for the battle outside the holy city. Maj. Gen. Othman al-Ghanemi, the commander, said there were 150 prisoners and Mr. al-Askari said 120 people had been taken captive.

Mr. al-Ghanemi added that the army captured some 500 automatic rifles in addition to mortars, heavy machine guns and Russian-made Katyusha rockets.

An Iraqi government spokesman, Ali al-Dabbagh, said the raid on Sunday was targeting a group called the Jund al-Samaa, or Soldiers of Heaven, and the group’s leader and foreign fighters were among the dead.

An American helicopter crashed during the fight, killing two American soldiers whose bodies were recovered, the military said. The statement did not give any information on why the aircraft crashed – the second American military helicopter to go down in eight days.

The fighting began Sunday and had largely subsided by Monday as Iraqi security forces frisked suspects while others patrolled elsewhere on the battlefield.

Authorities said Iraqi soldiers supported by American aircraft fought all day Sunday with a large group of insurgents in the Zaraq area, about 12 miles northeast of the Shiite holy city of Najaf.

Provincial Gov. Assad Sultan Abu Kilel said the assault was launched because the insurgents planned to attack Shiite pilgrims and clerics during ceremonies marking Ashoura, the holiest day in the Shiite calendar commemorating the 7th century death of Imam Hussein. The celebration culminates Tuesday in huge public processions in Najaf, Karbala and other Shiite cities.

Officials were unclear about the religious affiliation of the militants. Although Sunni Arabs have been the main force behind insurgent groups, there are a number of Shiite militant and splinter groups that have clashed from time to time with the government.

Iraqi soldiers attacked at dawn and militants hiding in orchards fought back with automatic weapons, sniper rifles and rockets, the governor said.

“They are well-equipped and they even have anti-aircraft missiles,” the governor said. “They are backed by some locals” loyal to ousted dictator Saddam Hussein.

The mortar attacks and bombings appeared to be part of the sectarian reprisal killings that have pushed Iraq into civil warfare over the past year, violence that President Bush hopes to quell by sending up to 21,500 more American soldiers to Baghdad and surrounding areas.

Bombings and mortar attacks targeting Shiites killed at least 15 people elsewhere on Monday.

A prominent Shiite leader said that setting up federal regions in Iraq would solve the country’s problems, adding that while Shiites are being subjected to mass killings, they should not retaliate by using violence.

Abdul-Aziz al-Hakim, leader of the Shiite bloc in the 275-member parliament, spoke at a Shiite mosque in central Baghdad to mark Ashoura. “I reaffirm that the establishing of regions will help us in solving many problems that we are suffering from. Moreover, it represents the best solution for these problems,” he said.

Mr. al-Hakim said his concern cut across sectarian lines.

“I sympathize with our Sunni brothers in their ordeal with the terrorists as I sympathize with the Shiites in their ordeal with the terrorists,” he said. “I condemn the killing of Sunnis as I condemn the killing of the Shiites.”

Mortar rounds rained down on a Shiite neighborhood in the Sunni-dominated town of Jurf al-Sakhar, 40 miles south of Baghdad, Monday morning, police spokesman Capt. Muthanna Khalid said. He said 10 were killed, including three children and four women, and five other people were wounded.

A wounded boy lay next to his bloodstained father at a hospital in the nearby town of Musayyib, while six bodies were covered with blankets in the morgue.

The strike came a day after mortar shells hit the courtyard of a girls’ school in a mostly Sunni Arab neighborhood of Baghdad, killing five pupils and wounding 20.

No group claimed responsibility for the attack, but a Sunni organization, the General Conference of the People of Iraq, blamed Shiite Muslim militias with ties to government security forces. The group said the mortar shells bore markings indicating they were manufactured in Iran, which American officials accuse of supporting Shiite militias.

Separately, Iran’s ambassador to Baghdad, Hassan Kazemi Qumi, said the Islamic country was ready to offer help for Iraq’s security and economy.

“We have experience of reconstruction after war,” Qumi told The New York Times, referring to the 1980-88 Iran-Iraq war that killed 1 million people. “We are ready to transfer this experience in terms of reconstruction to the Iraqis.”

Mr. Qumi also said Iran planned to open a national bank in Iraq – an announcement confirmed by a senior Iraqi banking official.