(Updates fatalities, wounded)

By Jaafar al-Taie

KUT, Iraq, March 14 (Reuters) - Members of Shi'ite cleric Moqtada al-Sadr's Mehdi Army militia clashed with Iraqi police in the southern city of Kut on Friday, a day after a close Sadr aide ordered militiamen to abide by a ceasefire, police said.

The militiamen clashed with Iraqi and U.S. soldiers earlier this week in Kut, 170 km (105 miles) southeast of Baghdad, sparking concerns a ceasefire may unravel and lead to an upsurge in violence.

Capt. Majed al-Amara said two policemen were killed and 10 people wounded.

"I'm not able to fight the gunmen with the few troops I have," said Lieutenant Aziz al-Amara, who commands a rapid reaction unit.

Police said mortars and small arms were used in the clashes, which took place in the Izzeh, Sharqia, and Hawia districts of the city. One police car was set ablaze.

The fighting on Friday started soon after the end of the funerals of men killed on Tuesday.

Sadr, whose militia fought two battles against U.S. forces in southern Iraq in 2004, extended a seven-month-old ceasefire last month, but at the weekend issued a statement telling followers they could defend themselves if attacked.

Gun battles in Kut killed a total of 11 people on Tuesday, according to the city's police chief, prompting U.S. special forces to call in air strikes after requests from Iraqi authorities for help.

Violence has dropped across Iraq by 60 percent since last June when an extra 30,000 U.S. troops became fully deployed. But attacks continue, particularly in Iraq's north where al Qaeda has regrouped.

FUNERAL OF ARCHBISHOP

Near the northern city of Mosul, which the U.S. military says is al Qaeda's last urban stronghold, hundreds of Iraqi Christians mourned the death of kidnapped Chaldean Catholic Archbishop Paulos Faraj Rahho.

The abduction and death of Rahho, 65, was the most high-profile attack on Iraq's Christians since the U.S.-led invasion in 2003. It drew international condemnation, including from U.S. President George W. Bush and Pope Benedict.

Hundreds of mostly Christian mourners crowded into the Mar Eddy church in Rahho's home village of Kramleis, east of Mosul, 390 km (240 miles) north of Baghdad, to pay their last respects.

"I ask the people of the church to be steadfast and patient," Cardinal Emmanuel III Delly, the Chaldean patriarch of Baghdad and leader of Iraq's Christians, told mourners.

Chaldeans belong to a branch of the Roman Catholic Church that practices an ancient Eastern rite and form the biggest Christian community in mostly Muslim Iraq, although tens of thousands are reported to have fled Iraq.

"I appeal to God that this awful act will help the peace process in this tortured country," Delly said.

Rahho was abducted on Feb. 29 after gunmen attacked his car and killed his driver and two guards. His body was found in a shallow grave in eastern Mosul on Thursday. It was not clear how Rahho, who was known to suffer poor health, had died.

Police at the Mosul morgue said he appeared to have been dead a week and his body bore no bullet wounds. Iraqi Prime Minister Nuri al-Maliki has blamed al Qaeda for his death.

Pope Benedict has repeatedly spoken of his concern about the plight of Christians in the Middle East. A number of Christian clergy have been kidnapped and killed and churches bombed in Iraq since the 2003 U.S.-led invasion.

(Additional reporting by Waleed Ibrahim, Mohammed Abbas and Aws Qusay in Baghdad; writing by Mohammed Abbas and Randy Fabi; Editing by Jon Boyle)

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