The UN resolution, which US Secretary of State Colin Powell predicted would be ready within days, was aimed at answering European complaints that a previous draft was too vague on how Iraqis could replace US occupation authorities.

A US soldier was killed in Iraq on Monday, the 81st to die in action since the start of May, as American forces backed by helicopters fought guerrillas for hours in a restive area west of Baghdad.

US State Department spokesman Richard Boucher said Washington wanted the UN Security Council to pass the proposed resolution before a conference of aid donors for Iraq, scheduled to open in Madrid on October 23.

"The goal is to respond in some ways to the desire of other governments to have a sense of...movement and momentum toward that political horizon, so we will be making appropriate modifications," Boucher told a daily briefing.

In Brussels, European Union foreign ministers called for the restoration of Iraqi sovereignty but set no timetable, unlike EU members France and Germany who have demanded such a move within months.

In a bid to help the Iraqi economy, legal authorities in Baghdad said the trial of accused oil smugglers from a Panamanian-flagged tanker with a Ukrainian crew was intended to send a clear message to traffickers draining Iraq of precious fuel.

US-led authorities said Iraq's current oil exports were around 1.2 million barrels per day (bpd) from production of nearly two million bpd -- well below peak exports of 2.8 million bpd before the war in March that toppled Saddam Hussein.

But the country's oil export potential is being closely watched on global markets, with oil cartel OPEC saying it was cutting production to accommodate a slow but steady rise in Iraq's exports and in the meantime pushing up oil prices.