The ministry said the president was not hurt in the attack on his convoy, which was fired on as it traveled between the camps of Bulgarian and Polish troops in the flashpoint city, where Shia militants have stepped up attacks against US-led forces in recent weeks.

"The president's car was shot up. No one was hurt," spokeswoman Rumiana Strugarova said.

"The attack took about five minutes, and we suppose the attackers were Shia militants. The president returned to Bulgaria in the early hours of the morning."

Meanwhile, an explosion leveled part of a building in Baghdad yesterday as American troops searched it for suspected production of "chemical munitions," a US general said. Two soldiers were killed and five wounded in the blast, and a cheering mob of Iraqis looted their wrecked Humvees, stripping away weapons and equipment.

Brig. Gen. Mark Kimmitt did not say what sort of chemical munitions were believed to be produced at the site.

"Chemical munitions could mean any number of things," including smoke grenades, he said.

Asked about reports that the raid team included members of the Iraq Survey Group -- the US team searching for weapons of mass destruction in the country -- Kimmitt would say only, "The inspection was by a number of coalition forces."

He said the owner and associates of the site were "suspected of supplying chemical agents" to Iraqi insurgents, but did not elaborate.

At Fallujah, eight insurgents were killed and at least four US marines were wounded during fierce fighting yesterday where an uneasy ceasefire had been in place for a week, the US-led coalition said.

A "significant" number of insurgents attacked marines at 11:30 am (0730 GMT), prompting hours of fighting in the northern district of the city, which has been a hotspot of resistance to the US-led occupation of the country.

"Initial reports were eight enemy killed and four marines wounded," Colonel John Coleman, chief of staff for the 1st Marine Expeditionary Force, told reporters.

Marines were fired upon from a mosque which was then targetted by US forces and the minaret destroyed, an embedded pool reporter with the marines told CNN. He said another six marines were injured by shrapnel but the reports could not be immediately confirmed.

"Unfortunately the opposition forces... took it upon themselves to occupy a mosque," said Coleman. "Instead of serving as a centre of religious life, it was employed as a bastion in the attack."

Plumes of black smoke were shown rising from buildings in the city, where joint patrols between marines and Iraqi security forces were expected to start this week after an apparent easing of tensions.

Meanwhile, Britain is in talks with coalition partners about possibly sending more troops to Iraq -- a high-risk move for Prime Minister Tony Blair who is already suffering in opinion polls.

With Spain planning to withdraw its 1,400 soldiers and violence escalating across Iraq, media reports suggested up to 2,000 more British troops could be sent to join around 7,500 already there.

"In light of recent events -- the security situation and the anticipated withdrawal of the Spanish troops -- we are in discussions with coalition partners," a defence ministry spokeswoman said yesterday.

She said troop numbers was "one of the things we will be discussing", but a spokesman for Blair stressed no decisions had been taken.

Blair has seen his public trust ratings plunge since he became Washington's staunchest ally in the Iraq war launched last March to topple former Iraqi President Saddam Hussein.

Britain has the second biggest military force in Iraq after the United States. Its soldiers are based mainly around the southern city of Basra.

If Blair does decide to deploy more forces, he could lose even more popularity at home and damage his reputation abroad.