BASRA, Iraq Iraqi security forces backed by U.S. troops killed at least five people Friday in a raid on suspected members of what Washington calls an Iranian-backed terrorist group, the U.S. military said.
Provincial Iraqi officials said many of the dead were innocent bystanders, and demanded compensation. They said eight people were killed.
While overall violence in Iraq has fallen over the last two years, attacks and fighting remain common as Iraq gears up for a March 7 parliamentary election and U.S. troops prepare to stop combat operations ahead of a withdrawal by the end of 2011.
The firefight with suspected members of Kata'ib Hizballah, a group that the U.S. State Department says has ties to Lebanon's Hezbollah, occurred 265 km (165 miles) southeast of Baghdad in a village near the Iranian border, the U.S. military said. Twelve people were arrested, it said.
"The joint security team was fired upon by individuals dispersed in multiple residential buildings ... members of the security team returned fire, killing individuals assessed to be enemy combatants," the military said in a statement.
"While the number of casualties has not yet been confirmed, initial reports indicate five individuals were killed," it said without specifying who was killed in the raid.
Maysan province governor Mohammed Shia al-Sudany told state-run television that eight people were killed, one wounded and 12 arrested in the village 75 km (46 miles) north of the provincial capital of Amara.
"What happened this morning was a massacre in every sense of the word. Eight people were killed. Most of them were innocent," Sudany said.
The provincial council has demanded financial compensation for the relatives of victims, that all those arrested be freed and a letter of apology, he said.
Hospital sources in Amara said the dead included a woman.
A Reuters photographer who arrived after the shooting saw bloodstains on the ground and bullet holes in the walls.
The U.S. military said that Iraqi and U.S. intelligence sources have seen an increase in weapons smuggling recently by Iranian-backed militia such as Kata'ib Hizballah. It gave no further information.