At least 28 people were killed, including four Salvadoran soldiers, and 200 people wounded on Sunday as backers of a Shia leader clashed with troops of the US-led coalition in Iraq.
The US military, meanwhile, said two US Marines were killed in action by insurgents in the restive western Iraqi province of Al-Anbar, but it gave no further details for security reasons.
The deadliest confrontation took place outside the shrine city of Najaf pitting supporters of firebrand cleric Moqtada Sadr against Spanish-led troops. At least 24 people were killed, including the Salvadorans.
Other clashes took place in Baghdad and the south-eastern city of Amara, where four people died in fighting with British soldiers.
In an ominous development that threatens to widen the rift between Iraq's Shia majority and the occupation forces, Sadr told his supporters on Sunday to "terrorise" the enemy as demonstrations were now pointless.
"There is no use for demonstrations, as your enemy loves to terrify and suppress opinions, and despises people," Sadr said in a statement distributed by his office in Kufa, south of Baghdad.
"Terrorise your enemy, as we cannot remain silent over its violations," he said, although it was not clear whether Sadr was literally calling on his followers to resort to violence.
But Shia spiritual leader Ali al-Sistani appealed for calm and urged Shia demonstrators to resolve their differences with coalition forces through negotiation.
The coalition, meanwhile, named two staunch opponents of ousted Iraqi president Saddam Hussein to head a new defence ministry and national intelligence service.
US overseer Paul Bremer said Iraq's new security institutions would "defend the country against terrorists and insurgents," and remain under tight civilian control.
Iraq's interim trade minister Ali Allawi was named as the country's first post-war defence minister, while Mohammad Abdullah Mohammad al-Shehwani, a former officer forced into exile by the Saddam regime, became intelligence chief.
The clashes outside Najaf marked the most dangerous face-off between the coalition and Iraqi Shias since the invasion.
They coincided with demonstrations in Baghdad and the southern port of Basra as Shias pressed their demands for the coalition to reopen a newspaper close to Sadr that was shut down last week for 60 days on charges of inciting violence.
They also want the release of a top Sadr aide, Mustafa al-Yaacubi, who was detained by the coalition on Saturday in connection with the murder of a rival cleric last April.
In Najaf, Dr Hassan al-Dulami, head of health services, told AFP: "There are at least 20 dead, including two policemen, and 200 wounded in the city's six hospitals."
In Madrid, the Spanish defence ministry said four Salvadoran soldiers belonging to the Spanish-led Plus Ultra Brigade were killed and nine other wounded in the clashes.
Accounts varied on how the fighting outside Najaf was ignited.
An AFP correspondent said the clashes erupted when demonstrators hurled rocks at a convoy of six vehicles from the Spanish brigade and started shouting at them: "No, no to America. No, no to Israel."
The convoy pulled back and then opened fire.
The demonstrators were marching from Najaf to the neighbouring shrine town of Kufa. But they had planned to stop at the Plus Ultra base to demand the release of Yaacubi, although Spanish troops in Najaf have denied arresting him.
"The Spanish base was attacked around noon (0800 GMT). The assailants fired on our soldiers and they riposted by respecting rules of engagement," said Colonel Carlos Harradon, a spokesman for the Plus Utra brigade which includes Salvadoran, Honduran and Dominican soldiers.
In Baghdad, a senior coalition spokesman said the disturbances started earlier when a vehicle leaving a camp of the paramilitary Iraqi Civil Defence Corps (ICDC) came under fire, wounding some of the occupants.
Armed men in black later fired at the Spanish base, the spokesman added.
Fearing that the Spanish-led troops might be overwhelmed and suffer significant casualties, coalition authorities called in planes and helicopter gunships, which did not open fire, the official said.
Sporadic fire continued until the evening, the spokesman added.
At least some of the Sadr supporters were carrying guns and belonged to the cleric's banned militia.
Sunday's fighting came as UN envoy Lakhdar Brahimi arrived in Baghdad for his second visit in two months to help resolve an impasse between the coalition and the Shiites over the nation's political future.