The shooting overshadowed the start of US-brokered talks aimed at sketching out a post-Saddam Iraq.

At Mosul hospital Dr Ayad al-Ramadhani said the American soldiers had fired into a crowd that was becoming increasingly hostile towards governor Mashaan al-Juburi as he was making a pro-US speech in the city.

But a US miltary spokesman said the troops had come under fire from at least two gunmen and fired back, but did not aim at the crowd.

"There are perhaps 100 wounded and 10 to 12 dead," Dr al-Ramadhani said as angry relatives of the dead and wounded voiced hatred of Americans and Westerners.

One witness, Marwan Mohammed, 50, said: "We were at the market place near the government building, where Juburi was making a speech. He said everything would be restored, water, electricity, and that democracy was the Americans.

"As for the Americans, they were going through the crowd with their flag. They placed themselves between the civilians and the building. The people moved toward the government building, the children threw stones, the Americans started firing. Then they prevented the people from recovering the bodies."

A doctor, Said Altah, said: "Juburi said the people must co-operate with the United States. The crowd called him a liar, and tempers rose as he continued to talk. They threw objects at him, overturned his car, which exploded. The wounded said Juburi asked the Americans to fire."

Ayad Hassun said the trouble broke out after the crowd interrupted Mr Juburi's speech with cries of, "There is no God but God, and Muhammad is his prophet."

"You are with Saddam's fedayeen," retorted Mr Juburi, to which the crowd chanted that, "The only democracy is to make the Americans leave."

He said 20 US soldiers escorted Mr Juburi back into the building. "They climbed on top of the building and first fired at a building near the crowd, with the glass falling on the civilians. People started to throw stones, then the Americans fired at them."

But the US spokesman said: "There were protesters outside, 100 to 150, there was fire, we returned fire. We didn't fire at the crowd, but at the top of the building. There were at least two gunmen. I don't know if they were killed. The firing was not intensive but sporadic, and lasted up to two minutes."

At the US-sponsored talks near the southern city of Nasiriyah, crowds earlier denounced the US presence in Iraq.

Thousands protested that they did not need US help now Saddam Hussein had gone. "No to America. No to Saddam," chanted Iraqis from the Shia Muslim majority oppressed by Saddam. Arabic television networks said up to 20,000 people marched.

In Baghdad, meanwhile, hundreds of people chanting "our blood and our soul we give to Iraq" gathered outside the Palestine Hotel in protest against the US presence. The hotel now houses US military and reporters.

Australia came in for criticism at the Nasiriyah conference when one delegate, Sheik Sayed Jamaluddin, hit out at the detention of Iraqi asylum seekers.

After thanking the US and Britain for liberating Iraqis from Saddam, the Shiite cleric said: "I call on the representatives of the Australian Government to ask the Government to accept the human rights of those Iraqis who are held prisoner in some capacity in Iraq [viz] that they might be treated in a humane fashion."

The talks ended on yesterday with an agreement to meet again in 10 days. Jay Garner, the former US general leading the effort to rebuild Iraq, opened the conference, saying: "A free and democratic Iraq will begin today."

Agencies