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BAGHDAD, June 2 (Reuters) - U.S. jets and helicopters circled over Baghdad amid the sound of explosions and heavy machinegun fire on Saturday evening, residents said.

A Reuters journalist saw at least one air-to-ground missile streak through the air before hitting the ground with a large flash.

The military activity, which by 1945 GMT appeared to have died down, seemed to be centred around the Shi'ite stronghold of Sadr City in northeastern Baghdad, the residents said.

Iraqiya state television said U.S. warplanes bombarded Habibibya, an area in Sadr City.

Residents told a Reuters journalist in Sadr City there had been casualties and that U.S. troops had cordoned off Habibibya. This could not be independently verified.

There was no immediate comment from the U.S. military which has been hunting four five Britons kidnapped in Baghdad last week and has also staged several raids in Sadr City aimed at a militant cell it says is linked to neighbouring Iran.

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