The United States said on Monday it would lay out steps in a new draft U.N. resolution to put Iraqis back in control of their country as the human cost of occupying Iraq mounted.

The U.N. resolution, which Secretary of State Colin Powell predicted would be ready within days, was aimed at answering European complaints that a previous draft was too vague on how Iraqis could replace U.S. occupation authorities.

A U.S. soldier was killed in Iraq on Monday, the 81st to die in action since the start of May, as American forces backed by helicopters fought guerrillas for hours in a restive area west of Baghdad.

State Department spokesman Richard Boucher said Washington wanted the U.N. Security Council to pass the proposed resolution before a conference of aid donors for Iraq, scheduled to open in Madrid on October 23.

"The goal is to respond in some ways to the desire of other governments to have a sense of...movement and momentum toward that political horizon, so we will be making appropriate modifications," Boucher told a daily briefing.

In Brussels, European Union foreign ministers called for the restoration of Iraqi sovereignty but set no timetable, unlike EU members France and Germany who have demanded such a move within months.

In a bid to help the Iraqi economy, legal authorities in Baghdad said the trial of accused oil smugglers from a Panamanian-flagged tanker with a Ukrainian crew was intended to send a clear message to traffickers draining Iraq of precious fuel.

OIL EXPORTS BELOW PRE-WAR LEVEL

U.S.-led authorities said Iraq's current oil exports were around 1.2 million barrels per day (bpd) from production of nearly two million bpd -- well below peak exports of 2.8 million bpd before the war in March that toppled Saddam Hussein.

But the country's oil export potential is being closely watched on global markets, with oil cartel OPEC saying it was cutting production to accommodate a slow but steady rise in Iraq's exports and in the meantime pushing up oil prices.

Washington sees oil as a crucial source of funds for reconstruction in Iraq.

The latest American death came in a bomb explosion as a U.S. military convoy traveled along a road near Habbaniya, about 40 miles from Baghdad, a U.S. military spokesman said. Another soldier was wounded.

Local people said at least five Iraqis had been wounded.

Soldiers and Iraqi police staged their biggest search operation yet in Saddam's hometown Tikrit on Monday, swooping on 15 houses but failing to grab the men they were looking for.

The U.S. military was more successful in 12 other raids in northern Iraq, from the Iranian border to the oil hub of Kirkuk, detaining 92 people in swoops on homes housing suspected members of Saddam's Fedayeen militia.

Overall violence underscored that Iraq's U.S.-led occupiers still face a tough task pacifying the country, but officials insisted the general security situation was improving and said they would scale back a curfew imposed on Baghdad.

BAGHDAD CURFEW SHORTENED

The U.S. Army's First Armored Division which patrols Baghdad said the city's curfew would now start at midnight instead of 11 p.m. It would continue to end at 4 a.m., an army statement said.

The acting U.N. coordinator in Iraq said on Monday the world body would keep enough staff in Iraq to carry out its work despite two bomb attacks on its offices in which at least 23 people died -- including the top U.N. official there.

At U.N. headquarters in New York, officials said the United Nations cut its international staff in Iraq over the weekend to less than 50 people from 86 last week and more than 600 before the devastating August 19 bombing of its Baghdad headquarters.

Security remains a key to attracting foreign investment.

A senior Iraqi official, OPEC delegation member Nabeel Musawi, told Reuters by phone on Monday Baghdad had begun to court several European oil company investors as it tries to spur development of the country's oil reserves -- the world's second biggest -- before Washington hands over power.

The oil smuggling trial of the captain and first mate of the Navstar I tanker in Baghdad was moved back to October 6 to take more testimony. The British navy seized the vessel and 3,500 tonnes of contraband diesel fuel it was allegedly carrying on August 9 in the Gulf. It is the first trial involving large-scale fuel smuggling.

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