Guerrillas fired rockets from donkey carts at Iraq's Oil Ministry and two Baghdad hotels used by Westerners Friday in audacious strikes on heavily fortified sites linked to the U.S.-led occupation.

U.S. soldiers inspect unexploded rockets while standing beside a rocket launcher they found in Waziriyah district near the Turkish and Italian embassies in Baghdad November 21, 2003. Rockets slammed into the Iraqi oil ministry and two central Baghdad hotels used by Western contractors and journalists, wounding several people. [AP]

The buildings were targeted just a day after a top U.S. commander said a new offensive against insurgents in Baghdad was reaping results with attacks against American-led forces falling sharply since Operation Iron Hammer was launched.

Brig. Gen. Mark Kimmitt, a U.S. military spokesman, said Friday Iraq's insurgents were becoming increasingly sophisticated.

"This is an adaptive enemy. ... He's inventive, he's ingenious, but we'll continue to try to stay one step ahead."

The commander of U.S. forces in the northern province of Kirkuk said he had no evidence foreign Muslim militants were fighting alongside loyalists of deposed leader Saddam Hussein (news - web sites) he blamed for the anti-U.S. attacks.

Iraqi police found a third cart loaded with 21 rockets near the Italian and Turkish embassies and close to the offices of one of Iraq's main Kurdish parties. A fourth cart was found near Baghdad's law faculty with the donkey wired with explosives.

Flames and smoke belched from the Oil Ministry complex which controls Iraq's most important industry, crucial for funding reconstruction after decades of conflict and sanctions.

Guests streamed out of the Sheraton and Palestine hotels, where many foreign contractors and journalists stay. Rockets punched holes in the walls and scattered concrete and broken glass across a wide area.

A U.S. military spokesman said the rockets -- identified as Russian-made Katyushas -- were aimed at the Palestine hotel but one had missed and hit the Sheraton.

"We saw a big flash -- there was just one big bang and then lots of crashing glass," said Dihyaa Salem, a manager at the Sheraton. "There was screaming as everyone left their rooms."

AUDACIOUS

Guerrillas have launched increasingly audacious attacks on occupying troops, foreign organizations and Iraqis working with them. Many foreign organizations have quit, following suicide car bomb attacks.

Faced with a mounting death toll -- guerrilla attacks have killed 181 U.S. soldiers since President Bush (news - web sites) declared major combat in Iraq over on May 1 -- Washington has taken both political and military steps to quell the insurgency.

U.S. officials announced plans for a faster transfer of power to Iraqis and the use of aerial bombing and satellite-guided missiles to target guerrillas.

In New York, France, Germany and Russia told the United States and Britain to include the United Nations (news - web sites) in every stage of the Iraqi self-rule process and organize a conference for Iraqi leaders and key countries in the region.

Friday's attacks came a few hours after U.S. Brig. Gen. Martin Dempsey said the new military tactics were working with attacks on his troops falling by around 70 percent.

Dempsey added though that the offensive had uncovered evidence of fairly well structured guerrilla cells able to coordinate their operations.

Col. William Mayville, commander of U.S. forces in Kirkuk, said he believed his forces were being attacked by people with grievances against the U.S.-led occupation, primarily Sunni Muslim tribesmen who had the most to lose as democratic institutions emerge in Iraq.

"I'm very uncomfortable about saying Islamists are involved," Mayville told Reuters. "It's 90 percent former regime loyalists and 10 percent is a margin of error. I have no evidence of links to Islamists."

Col. Peter Mansoor of the 1st Armored Division said both the Oil Ministry and the hotels were hit by rockets fired from launchers hidden under agricultural goods on donkey carts.

A U.S. civilian contractor staying at the Palestine was critically injured, one U.S. spokesman said, and several others suffered cuts from flying glass. Two rockets hit an unoccupied room in the Palestine, blowing a large hole in the wall.

Oil prices held firm Friday as news of a rocket attack on Iraq's oil ministry supported a market already fearful that Middle East violence will disrupt crude supplies.

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