(Updates death toll, adds police quote)

By Jaafar al-Taie

KUT, Iraq, March 20 (Reuters) - Three people were killed in clashes between Iraqi police and Mehdi Army militia members in the southern city of Kut on Thursday, the fifth anniversary of the start of the Iraq war, hospital and police sources said.

Gunbattles broke out last week between Iraqi security forces and Shi'ite cleric Moqtada al-Sadr's militia in Kut, fuelling fears that a ceasefire by Sadr may unravel. The violence has so far been confined to the city 170 km (100 miles) southeast of Baghdad.

Sadrist leaders have distanced themselves from the fighting, denying their members were involved.

Sadr, whose militia fought two battles against U.S. forces in southern Iraq in 2004, extended a seven-month-old ceasefire last month, but said two weeks ago his followers would defend themselves if attacked.

A hospital source said two police officers were killed by gunshot wounds and five people were injured in Thursday's violence.

Police said they killed one armed man and arrested three others.

Clashes started when officers began a search for militants and other suspects in al-Jihad neighbourhood, a police captain in Kut said.

The police have arrest warrants for some 200 people in Kut and have found less than a quarter so far, ministry spokesman Major General Abdul-Karim Khalaf told reporters on Wednesday.

He said police had been able to regain control of five of nine districts where the Mehdi Army had a strong presence.

At least 16 people have been killed in fighting in Kut in the last 10 days, police said. (Writing by Randy Fabi; Editing by Caroline Drees)

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