By Aziz El Yaakoubi and Nadine Awadalla
BAGHDAD (Reuters) - Gunmen shot dead two protesters in Iraq's southern city of Nassiriya overnight and a Baghdad district became a battlefield on the third day of a drive by security forces to end months of demonstrations against the largely Iran-backed ruling elite.
Clashes over the weekend had already killed at least five protesters. Rockets also hit the U.S. embassy compound in Baghdad's fortified Green Zone housing government buildings.
Ambassadors of 16 countries in Baghdad including the United States, France and Britain condemned the use of live fire by Iraqi security forces and called for a credible investigation into the deaths of more than 500 protesters since October.
Security sources said three people were wounded when at least one rocket landed in the U.S. embassy compound, the first time in years that an attack on the Green Zone - a regular occurrence - had hurt staff there.
The Iraqi military said five Katyusha rockets hit the Green Zone late on Sunday, without reporting casualties.
In a phone call with Iraqi Prime Minister Adel Abdul Mahdi, Secretary of State Mike Pompeo expressed outrage at the continued assaults by Iran's armed groups targeting U.S. facilities in Iraq, including Sunday's attack, State Department spokeswoman Morgan Ortagus said.
She said Sunday's rocket attack resulted in one injury. "The Secretary underlined once again that these attacks demonstrate a wanton disregard for Iraqi sovereignty and a failure to rein in these dangerous armed groups," Ortagus said in a statement.
"The Secretary noted that we view last night’s attack on the Embassy as an attempt to distract Iraqi and international attention away from the brutal suppression of peaceful Iraqi protesters by Iran and its proxies," she said.
Authorities began the pushback on Saturday to try to end protests that began in the capital on Oct. 1 and in other southern cities. Demonstrators are demanding the removal of all politicians, free elections and an end to corruption.
In Nassiriya, at least 75 protesters were wounded, mainly by live bullets, in overnight clashes when security forces tried to move them away from bridges, police and health sources said.
Unknown gunmen in four pickup trucks had attacked the main protest camp there, shooting dead the two people and setting fire to demonstrators' tents before fleeing the scene, the sources said.
Some protesters began building more permanent structures using bricks, Reuters witnesses said, while others broke into a police office on Monday and set fire to at least five police vehicles parked inside.
The leaderless movement is an unprecedented challenge to Iraq's Shi'ite Muslim-dominated and largely Iran-backed ruling elite, which emerged after a U.S.-led invasion toppled Sunni dictator Saddam Hussein in 2003.
Pitched battles raged in the Khilani area of central Baghdad near Tahrir Square, on Monday with protesters throwing stones and Molotov cocktails at security forces using tear gas, live rounds in the air and slingshots to push them back.
Some of the demonstrators danced on the protest frontline while others shielded themselves behind concrete blocks and trees or by using metal sheets.
"This revolution is peaceful. They use various kinds of fire against us, live ammunition, bullets and teargas canisters. I got injured in my face," said Allawi, a hooded protester who gave only his first name.
Tuk-tuks darted through the crowd to help the wounded and carried away protesters suffering from teargas inhalation.
Demonstrations continued in other southern cities, despite repeated attempts by security forces to clear up their camps.
Nearly 500 people have been killed in the unrest, with both security forces and unidentified gunmen shooting people dead. After a lull earlier this month, demonstrations resumed; protesters have controlled three key bridges in Baghdad and maintain camps and road blocks in several cities in the south.
The government has responded with violence and piecemeal reform. The international community has condemned the violence but has not intervened to stop it.
Saturday's push by the authorities began after populist cleric Moqtada al-Sadr said on Friday that he would halt the involvement of his supporters in the demonstrations.
Sadr had backed the demands of protesters for the removal of corrupt politicians and for the provision of services and jobs soon after the demonstrations began in October, but stopped short of calling on all his followers to join in.
"Everyone has come out protesting against the government," said Hussain, a protester. "We demand that all politicians resign and get out. We don't want Moqtada or any of them."
(Additional reporting by Humeyra Pamuk in Washington, Reporting by Aziz El Yaakoubi, Nadine Awadalla, Baghdad bureau, John Irish in Paris; Writing by Ahmed Rasheed, Editing by Philipaa Fletcher and Leslie Adler)