Tens of thousands of Iraqis took to the streets of the southern city of Basra in a peaceful rally of support for demands by a senior Shi'ite cleric for early, direct elections. And, old Iraqi bank notes bearing portraits of Saddam Hussein are no longer legal tender.

Iraqis turned out in large numbers to show their support for demands by Grand Ayatollah Ali al-Sistani for early elections.

They chanted, "No to America," "Yes to Sistani," and some carried signs calling for a U.N. role in the transition process. The transition plan, worked out by U.S. officials and the Iraqi Governing Council, calls for nationwide meetings to choose a Transitional National Assembly that would appoint an interim government, in June, to run the country until elections late next year.

But Ayatollah al-Sistani wants a directly elected government from the outset. He says anything else would lack legitimacy. Last Sunday, he warned that implementing the current transition plan will create further instability and unrest.

The Ayatollah is considered the most influential cleric among Iraq's Shi'ite majority and his demands are not being taken lightly.

The head of the Governing Council, Adnan Pachachi, addressed the transition issue.

"We all believe the best way to elect legislative bodies is through direct general elections, if we can be sure that there is enough time to conduct these elections," he said. "And they should be well prepared for, so that the elections would reflect truly the desires of the Iraqi people."

Iraqi and U.S. officials say the country is not yet prepared to hold nationwide elections. Talks are scheduled next week with the United Nations on the possible return of U.N. staff to Iraq, and the organization's future role in the country. On another issue, Danish military officials say initial tests conducted on dozens of old mortar shells found in southern Iraq last week indicate the shells do not contain chemical warfare agents, as had been feared. Danish officials say the preliminary test results on the mortar shells will be sent to the United States for verification.

Thursday was also the last day for Iraqis to exchange old bank notes for new ones. The old dinars bearing Saddam Hussein's portrait are worthless, and new notes with scenes of Iraqi landscapes and monuments are legal tender. The Central Bank says more than 10,000 tons of old dinar notes are being destroyed.

The new notes are designed, in part, to erase another memory of Saddam. They are also said to be less prone to counterfeiting, and it is hoped they will boost confidence in the Iraqi economy.