(Updates with raid on top lawmaker's home, Diwaniya clashes)

DIWANIYA, Iraq, April 7 (Reuters) - U.S. forces launched an air strike in Diwaniya on Saturday as U.S. and Iraqi troops fought for a second day to wrest control of the city from Shi'ite militias.

A local hospital source and a resident said six people, including two children and a woman, were killed in the missile strike on a home in the centre of the city, 180 km (110 miles) south of Baghdad.

U.S. military spokesman Lieutenant-Colonel Scott Bleichwehl said one person had been killed when a warplane fired on gunmen carrying rocket-propelled grenade launchers.

"The engagement was initiated by a tip that was called in by a local citizen. We had visual confirmation that there was a hostile target. There was no collateral damage," he said.

Iraqi and U.S. forces launched Operation Black Eagle at dawn on Friday to restore government authority over a city where Shi'ite militias are a powerful and feared presence, particularly Shi'ite cleric Moqtada al-Sadr's Mehdi Army, which the Pentagon says is the greatest threat to peace in Iraq.

The government said this week it was extending the nearly two-month-old U.S.-Iraqi security crackdown in Baghdad to other cities as it seeks to halt a slide into sectarian civil war.

Diwaniya has been the scene of fierce battles between U.S. and Iraqi forces and militiamen in past months. Forty people were killed in street battles in October.

Thirteen Iraqi soldiers were summarily executed when they ran out of ammunition and were captured during a firefight with Shi'ite militiamen in the city last August. The incident prompted questions about the capabilities of the new Iraqi army.

TWO US SOLDIERS KILLED

The U.S. military said two U.S. soldiers died in separate roadside bombings in the east and west of Baghdad on Friday.

One of the bombs was an explosively formed projectile, a particularly deadly type of device which Washington accuses Iran of supplying Iraqi militants.

The U.S. military also disclosed they raided a "safe house" belonging to a Sunni political party on Tuesday and seized a large number of weapons, including rockets and bomb-making material, and detained 14 bodyguards of a member of parliament.

Sources in the Sunni Accordance Front, the biggest Sunni political bloc in parliament, said the house belonged to a top Sunni politician, Khalaf Alian, who was out of the country.

Shi'ite and Kurdish officials have often accused some Sunni political parties of ties to the anti-government insurgency.

In Diwaniya, Saturday's fighting was concentrated in five central districts and gunmen fought back with roadside bombs and rocket-propelled grenades in hit-and-run attacks, an Iraqi military source there said.

Residents stayed indoors after U.S. helicopters dropped leaflets warning them not to venture out. A curfew has been in place since Friday. One resident reported hearing explosions, gunfire and helicopters flying overhead.

A source at the local hospital said it had received a total of 13 bodies and 41 wounded in the last 48 hours.

Colonel Michael Garrett, commander of the 4th Brigade Combat Team, 25th Infantry Division, said three U.S. soldiers had been wounded and two armoured Humvees destroyed in the fighting. The Iraqi army said three of its soldiers were wounded. Three gunmen were killed in Friday's clashes, the U.S. military said.

Garrett said U.S.-Iraqi security stations were to be set up in the city, particularly in areas where militias operated. Similar bases set up in Baghdad as part of the crackdown there have helped reduce the daily murder rate in the capital.

Meanwhile Iraq's foreign minister, Hoshiyar Zebari, announced a ministerial meeting between Iraq, its neighbours and world powers on stabilising the country would be held in Egypt in the first week of May.

The meeting, a rare chance for Washington and its adversaries Iran and Syria to sit at the same table, is a followup to earlier talks in March. Zebari also said that an international conference on a five-year plan for reconstruction of Iraq will be held in Egypt at the same time.

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