Iraqi officials are negotiating with radical cleric Moqtada al-Sadr to end nine days of bloodshed in the holy city of Najaf. A British journalist wounded and kidnapped by unidentified gunmen is released but an Egyptian hostage has been beheaded. Despite the violence, Iraq's interim government is going ahead with a national conference on Sunday to help sort out the country's political future.

A spokesman for Shi'ite cleric Moqtada al-Sadr says the cleric's representatives are talking with the governor of Najaf about how to resolve the crisis.

He says there are some obstacles to ending the combat but he does not offer any details.

The spokesman says conditions for removing al-Sadr militia from the Imam Ali shrine and the holy city include withdrawing all U.S. forces from Najaf and putting religious authorities in charge of the city. Moqtada al-Sadr also is reported to be demanding amnesty for his Mahdi militia and participation in Iraq's political process.

The fighting appears to have eased while negotiations are underway.

Al-Sadr supporters were infuriated by reports the cleric had been wounded and chanted his name as they gathered for Friday prayers.

Thousands of al-Sadr supporters also held a protest rally in Baghdad where U.S. and Iraqi forces also have been battling the Mahdi militia.

In Washington U.S. Secretary of State Colin Powell supports the talks to end the violence. He says U.S. forces are committed to helping Iraq pacify the situation.

"We hope a solution will be found in the very near future. But there has to be a solution that ends this kind of outlaw activity on the part of the Mahdi Army and similar organizations," he said.

In other developments, a British journalist who was wounded and then abducted from his hotel in Basra has released. But a video on an Islamic website shows what it claims is the beheading of an Egyptian hostage.

And, Iraqi officials still expect to open a national conference on Sunday to select 100 members of an interim national assembly that will organize elections for a more permanent government.