Iraq regains control of cities as U.S. pulls back

BAGHDAD (Reuters) - Iraq regained full control if its towns and cities on Tuesday as U.S. troops pulled back, six years after the invasion to topple Saddam Hussein.

Though some Iraqis fear the first step in a full U.S. withdrawal may leave them open to attack, the government declared "National Sovereignty Day" a holiday and held a military parade to flex its muscles at a still stubborn insurgency.

"This day, which we consider a national celebration, is an achievement made by all Iraqis," Prime Minister Nuri al-Maliki said in a televised address, as citizens drove around the streets with flags and plastic flowers draped over their cars.

"Our incomplete sovereignty and the presence of foreign troops is the most serious legacy we have inherited (from Saddam). Those who think that Iraqis are unable to defend their country are committing a fatal mistake."

By midnight on Tuesday, all U.S. combat units must have withdrawn from Iraq's urban centres and redeployed to rural bases, according to a bilateral security pact that requires all U.S. troops except for trainers and advisers to leave Iraq by the end of 2011.

In a bloody reminder of the war unleashed by the 2003 U.S. invasion, the U.S. military said four U.S. soldiers based in Baghdad had died of combat-related injuries on Monday. It gave no further details.

150 BASES

Pentagon spokesman Bryan Whitman said the United States had closed or returned to local control 120 bases and facilities, and would turn over or close another 30 by the end of Tuesday.

The day's festivities included a parade in Baghdad's heavily fortified Green Zone government and diplomatic district, viewed by Iraqis as the ultimate symbol of the foreign military presence until local forces took control of it in January.

Thousands of Iraqi soldiers and police paraded on foot or in U.S.-donated Humvees, armored cars and tanks -- in the same compound beside a monument to the Unknown Soldier where Saddam's forces used to stage elaborate displays of power.

The state television channel, Iraqiya, has been running a countdown clock in a corner of its screen.

And across Baghdad, signs were draped on the ubiquitous concrete blast walls reading "Iraq: my nation, my glory, my honor."

"We still have important steps to take and we know our way forward is not easy," Interior Minister Jawad al-Bolani told Reuters at the parade.

"We need to develop our intelligence gathering and technical abilities, because the next war is an intelligence war."

Maliki has compared the U.S. pullback to rebellions by Iraqi tribes against the former British empire in 1920. Many Iraqis see it as restoring their national pride, six years after the U.S. invasion to oust Saddam turned into a foreign occupation.