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Anti-government demonstrators rebuilt torched protest camps across Iraq on Monday, seeking to keep up their movement's momentum after a rocket attack on the US embassy in Baghdad threatened an escalation.

The attack, which wounded one person, marked a dangerous shift after volleys of rockets in recent months targeted Iraqi military bases where American troops are deployed. No faction has claimed responsibility but the US has repeatedly blamed Iran-backed military factions for previous incidents.

The latest attack sparked renewed fears that Baghdad could be dragged into a conflict between Tehran and Washington, weeks after tensions spiked following the US killing in Baghdad of a top Iranian general.

Anti-government activists fear such a conflict would derail their movement, the largest grassroots campaign Iraq has seen in decades. They also fear a crackdown after losing the support of powerful Shia cleric Moqtada Sadr, who backed the rallies when they first erupted then abruptly changed his mind Friday after holding his own anti-US rally.

University students have carried the torch, gathering in the thousands in Baghdad and the Shia-majority south to insist on their demands and affirm their political independence.

"When we first came out to protest and hold sit-ins, we didn't commit to the narrative of the Sadrist movement or any other political party," said Zainab Mohammad, a university student in the shrine city of Karbala.

"We came out on our own, and we will continue until our demands our met," she said.

Protesters are demanding snap elections, an independent successor to resigned prime minister Adel Abdel Mahdi and the prosecution of those implicated in corruption or recent bloodshed.

Angered by a lack of progress, they began ramping up pressure a week ago, sealing streets with burning tyres and metal barricades. Riot police have responded with live rounds and tear gas.

Early on Monday, unidentified gunmen stormed a protest camp in the flashpoint southern city of Nasiriyah and torched tents, an AFP correspondent there said.

The attackers fired on activists who had been sleeping there, killing one and wounding four others, a medic said.

But hours later, determined protesters had erected new tents and even built a one-room cement installation, signalling their determination to stay put.

In the oil-rich but impoverished port city of Basra, student protesters re-erected tents dismantled by authorities over the weekend, AFP's reporter said.

The main protest camp in the Shia holy city of Najaf was also burned down overnight by unidentified gunmen, but protesters jumped into action Monday morning, blocking roads with burning tyres.

In the early afternoon, a funeral march made its way through the city to mourn the young man killed earlier in the day in Nasiriyah, identified as 14-year-old Ali Zuweir.

Relatives carried Zuweir's coffin through Najaf, a favoured burial place for Iraqi Shias, holding up his portrait and weeping loudly.

This week's uptick in violence has killed 21 protesters, bringing the toll since October close to 480 dead, the vast majority demonstrators, according to an AFP tally compiled from medics and security sources.

Copyright Agence France-Presse, 2020

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