* Ubaidi led biggest Sunni Muslim bloc
* Killing could undermine reconciliation efforts
By Waleed Ibrahim
BAGHDAD, June 13 Iraq buried a murdered Sunni Muslim leader on Saturday in the first formal state funeral held by the government since the U.S.-led invasion in 2003.
Harith al-Ubaidi, head of the biggest Sunni bloc in parliament and a leading human rights advocate, was shot dead at a mosque in west Baghdad after Friday prayers. [ID:nLC462379]
He had been seen as an important moderate able to broker peace among his bloc's groups and also with Shi'ites, Kurds and others who have vied for power in the past six years.
"Ubaidi was the voice of moderation and, unfortunately, those kinds of men are always targeted because of that," parliamentary speaker Ayad al-Samarai said as Ubaidi's coffin, and that of a brother-in-law, were laid out in parliament.
Prime Minister Nuri al-Maliki and lawmakers from across Iraq's political spectrum watched as a white-clad honour guard carried Ubaidi's coffin and the other containing his sister's husband, a close aide, who was among five other people killed.
Police said a young man shot the politician twice in the head with a pistol before opening fire on worshippers and throwing a grenade. He was then killed by mosque guards.
The assassination could undermine efforts for reconciliation in the country, which holds a parliamentary election next January. The vote will be a test of whether its feuding factions can live in peace after the sectarian bloodshed that followed by the 2003 invasion, which overthrew Saddam Hussein.
Maliki's Shi'ite-led government has said attacks will intensify ahead of the vote, and blamed recent violence on al Qaeda and other Sunni Islamist groups still waging an insurgency despite a sharp fall in bloodshed in the past year.
Al Qaeda, which views Shi'ite Muslims as heretics, and Sunni hardliners accuse members of Ubaidi's Accordance Front of being traitors for taking part in the political process.
Ubaidi's murder could mean efforts to foster greater dialogue between the administration and Sunnis may suffer as Sunnis retreat behind a veil of suspicion. [ID:nLC822382]
U.S. combat forces are due to leave Iraqi cities by the end of this month, and withdraw completely by 2012. Washington hopes political rapprochement can be reached before they depart.
Adel Abdul-Mahdi, Iraq's Shi'ite vice-president, said at the funeral that all members of parliament were under threat.
"We must stand as one against the repulsive terrorist groups who target every faithful and sincere official," he said. (Writing by Daniel Wallis; Editing by Andrew Dobbie)