(Adds Bush signing war funding bill, paragraphs 11-12)

By Khaled Farhan

KUFA, Iraq, May 25 (Reuters) - Fiery Shi'ite cleric Moqtada al-Sadr appeared in public for the first time in months on Friday to renew demands for the withdrawal of U.S. forces from Iraq and paint himself as a leader for all Iraqis.

About the time he was delivering a sermon at Friday prayers in the holy city of Kufa, Iraqi special forces killed a top leader of his feared Mehdi Army militia in southern Basra.

The U.S. military announced Friday the deaths of eight more soldiers in Iraq, underscoring President George W. Bush's prediction Thursday that a bloody summer lay ahead.

Sadr had not been seen since before a security crackdown began in Baghdad and other areas in February, but the charismatic cleric re-emerged to brand the United States, Britain and Israel the "evil trio."

In his sermon, Sadr sought to portray himself as a national leader prepared to defend the interests of Sunni Muslims and Christians as well as majority Shi'ites. He also tried to reinforce his authority over his Mehdi Army militia, calling on them to stop fighting Iraqi forces.

"I renew my demand for the occupiers to leave or to draw up a timetable for withdrawal, and I ask the government not to let the occupiers extend their occupation even for one day," Sadr told thousands of worshippers.

The U.S. military says Sadr fled to Iran in January before the Baghdad security plan was launched, but aides to the young cleric insist he never left Iraq.

"Now that he's back from four months in Iran, we hope he'll play a constructive role in the future of Iraq," White House National Security Council spokesman Gordon Johndroe said in Washington.

In Washington, a new Senate report said Friday that U.S. intelligence agencies warned the Bush administration before the Iraq war that al Qaeda and Iran could exploit a U.S. invasion to extend their sway in the region.

Congressional Democrats seized on the report as clear evidence that Bush, a Republican, and his advisers ignored warnings about the chaos that could follow a U.S. invasion.

Bush signed a bill on Friday with $100 billion to pay for the Iraq war but congressional Democrats who failed to impose a troop withdrawal deadline said their fight to wind down U.S. involvement in the war was far from over.

Passage of the emergency spending legislation capped a four-month struggle between Bush and a new Democratic-controlled Congress determined to force him to shift course in the unpopular war.

POLITICAL FLUX

Sadr's reappearance comes at a crucial time for Prime Minister Nuri al-Maliki's Shi'ite-led government, which is under increasing pressure from Washington to meet targets for promoting national reconciliation.

Six Sadrist ministers withdrew from Maliki's weak and divided government last month in protest at the prime minister's refusal to set a timetable for a U.S. troop withdrawal.

In Basra, the British military said Iraqi special forces had killed the leader of Sadr's militia in the oil hub, 340 miles (547 kilometers) southeast of Baghdad.

Wissam Abdul Qader and at least one aide were shot shortly after leaving Sadr's office in the center of the city, which is the gateway to the Gulf and to Iraq's main oilfields.

British military spokesman Major David Gell said Abdul Qader resisted arrest. He was suspected of involvement in planting roadside bombs, weapons trafficking, assassinations and planning and participating in attacks against British troops.

British troops have stepped up operations against Shi'ite militias as they prepare to hand Basra over to Iraqi security forces later this year.

The U.S. military has deployed thousands of extra troops around Baghdad and other areas in a last-ditch attempt to drag Iraq back from the brink of all-out sectarian civil war between majority Shi'ites and Sunni Arabs dominant under Saddam Hussein.

The crackdown is an attempt to buy time for Maliki to meet Washington's political targets, which include a crucial revenue-sharing oil law.

In what could be disappointing news for Washington, Iraqi Oil Minister Hussain al-Shahristani said in India that the oil law, which parliament had been expected to pass by the end of May, might not be ready for a further two months.

Five U.S. soldiers died Thursday and one Tuesday, the military said, all but one killed by roadside bombs. The U.S. military said two more soldiers died Friday, one from an explosion in Muqdadiyah, 90 km (56 miles) northeast of Baghdad and another from small arms fire in the capital.

April was the worst month this year for the U.S. military, with 104 soldiers killed. Ninety two have died in May so far. (Additional reporting by Ross Colvin and Mariam Karouny in Baghdad)

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