Several rockets have been fired at a central Baghdad hotel complex used by foreign businessmen and journalists.
A US soldier and an eyewitness said plumes of smoke rose into the air when the rockets struck the Sheraton hotel, although there have been no reports of casualties.
A minivan drove up to within range of the heavily guarded Sheraton and started popping off rockets, said a US army captain who gave his name as Mayo.
The attackers were part-way through launching a cache of about nine home-made projectiles when the remaining ordnance exploded in the vehicle, Mayo said.
Aljazeera correspondent Laila al-Shayb reports from Baghdad that an Iraqi police source said a similar incident took place at Wathiq Square, five kilometres from Firdaws Square, but the information has not been officially confirmed.
**Loud explosion***
With regard to the Sheraton attack, Captain Mayo said: "As we understand right now, there were no Iraqi casualties or any Iraq security forces casualties or any casualties within the coalition forces. One rocket may have hit the hotel."
A witness said a rocket smashed into the Sheraton hotel's 10th floor and a second projectile crashed into the nearby Baghdad Hotel's parking lot.
They were fired from a minivan parked alongside Firdaws Square outside the heavy concrete barriers that seal off the Sheraton and its sister hotel, the Palestine, the witness said.
A local resident said the attack happened at about 05:50 (02:50 GMT). "I heard a very loud explosion," recalled Duraid Aziz, 38.
At least two loud explosions shook the areas and black smoke belched into the sky.
The Sheraton and Palestine hotels are occasional targets of rocket and mortar attacks.
**PHOTO CAPTION***
Unidentified members of the media look out through a blast damaged wall at the Sheraton Hotel in Baghdad, after a rocket attack on the building Friday July 2, 2004. (AP)