A US-Iraqi patrol has been ambushed while distributing grants to Iraqi businesses near the northern city of Kirkuk, the American military said Wednesday.
Iraqi officials said two civilians were killed when the Americans returned fire, but the US military said those killed were enemy fighters.
The shooting came as tensions were rising over a deadly US raid in southern Iraq that the Iraqi government says violated a security agreement.
US spokesman Maj. Derrick Cheng said several people launched grenades and began shooting Wednesday as the patrol was handing out micro-grant money to stimulate small businesses in the town of Riyadh.
He said reports indicate "two enemy killed and one wounded," and one American was also wounded.