U.S. troops and insurgents clashed Friday for a second day in northern Iraq. But in the southern holy city of Kufa, militia loyal to radical Shi'ite cleric Moktada al-Sadr obeyed his order to leave the city and return to their homes.

U.S. forces clashed with insurgents near the northern city of Baquba for the second day in a row. A housing complex was damaged in the firefight.

In Baghdad, three Iraqis were killed and three coalition soldiers wounded when an explosive device detonated in the middle of a crowded street.

Farther south, in the holy city of Kufa, radical Shi'ite cleric Moktada al Sadr ordered his militia to put down their weapons and return to their homes.

Hundreds of fighters chanted victory slogans outside the mosque Friday before leaving the city.

A ceasefire between Moktada al-Sadr and the U.S. forces has ended several weeks of bloody clashes. Mr. al-Sadr used his Friday sermon to blast Iraq's interim president, labeling him a U.S. puppet. Last week he said he would support the new government if it meant the end of a U.S. presence in Iraq. The U.S.-led coalition insists the Shi'ite cleric must respond to an arrest warrant for the murder of a rival cleric last year.

The new interim government is preparing for the July 1 handover of full sovereignty that will put Iraqis in charge of the country's political future. U.S. and other foreign troops will remain to help secure the country.

On Thursday, Iraq's new interior minister warned that the government could impose martial law if the wave of terrorist violence does not subside.

In other news, the U.S.-led coalition says Iraq will resume oil exports on Sunday. Operations were suspended earlier this week after an attack on the southern pipeline disrupted the oil flow.

And three hostages from Lebanon, Egypt, and Turkey being held in Iraq are reported to have been released unharmed.