Rumours were rife in the capital that guerrillas had declared a "day of resistance" this weekend and planned a series of bombings.

A handful of United Nations international staff who had remained in Baghdad left their bomb-shattered headquarters early in the morning in a bus escorted by American soldiers in Humvees. A US helicopter hovered overhead.

The UN staff were being withdrawn from Iraq pending talks in Cyprus on whether to continue working in Baghdad despite mounting dangers. Most foreign staff had already left after a truck bomb attack in August killed 22 people including the head of the UN mission, Sergio Vieira de Mello.

This week's evacuation followed suicide car bomb attacks on the International Committee of the Red Cross and three police stations Monday, which killed at least 35 people in the bloodiest day in Baghdad since Saddam Hussein's fall in April.

In the northern city of Mosul, a bomb was detonated outside a police station as two US vehicles drove past yesterday.

"There was a huge blast. The two drivers of the vehicles were definitely killed," said policeman Abdul Ahman Fawaz, who witnessed the explosion, his face spattered with blood.

The US Army said two 101st Airborne Division soldiers were killed and two wounded in the blast.

Attackers have killed 120 US soldiers since Washington declared major combat over on May 1 -- more than the 114 killed in action during the war in March and April.

The US consular office in Baghdad and the Australian embassy issued warnings of the risk of fresh terror attacks and the State Department warned Americans again to avoid travelling to Iraq, saying there was a "credible" though unspecified threat to civilian aviation.

Most Baghdad schools were deserted and normally busy shopping areas were quiet. Residents said they were worried that schools, markets and mosques could be the target of attacks.

"My family wouldn't allow my two sisters to go to school today because of the threats. Even my friends at university and college are staying at home," said Luay Adeeb, 19, a cigarette vendor in a Baghdad commercial district.

"To be honest, I'm scared, but I have to work."

Fighting broke out Friday in Abu Ghraib on the western edge of the capital after attackers threw grenades at US soldiers in a market, wounding two. An Iraqi policeman was killed during the unrest, shot by a gunman on a rooftop.

An Iraqi oil ministry source said a lack of security was hurting crude exports from the country, which has the world's second largest reserves.

The source said northern Iraq's main pipeline to Turkey may not resume operation next week as planned. It was still under repair after being sabotaged.

In Washington, the independent Congressional Budget Office said the occupation of Iraq could cost up to $200 billion over the next decade, depending on its size and length, and that in a worst-case scenario US troops could be in the country to 2013.

Some US officials have been quoted as saying that Saddam and one of his top lieutenants, Izzat Ibrahim, are playing a key role in directing attacks, in cooperation with Ansar al-Islam, a group linked to al Qaeda suspected of being behind many of the recent suicide bomb attacks in Iraq.