"When the capital resists, the invaders can no longer advance and have to retreat," Saddam said in a speech read on his behalf by Information Minister Mohammed Said al-Sahhaf on Iraqi television.

The speech came as Iraqi special forces engaged in fierce fighting with around 1,000 US troops who had taken near total control of Saddam International Airport, a sprawling civilian and military complex just 20 kilometers (12 miles) south of the city center.

Heavy artillery, gunfire and air raids continued to be heard at midday coming from the airport.

The assault on the airport came along with overnight coalition missile bombings on the capital itself, which was plunged into a seemingly intentional power blackout that caused a cut in water supplies for the first time in the 16-day-old war to topple Saddam's regime.

But life in the center of the capital had a semblance of normality on Friday, with cars and public buses on the streets alongside a deployment of armed security and police forces.

Targets in overnight bombing were not immediately apparent but one downtown building was set ablaze.

Shops on main avenues were closed, but groceries and some restaurants were open as usual with clients gathering around small radio sets to listen to the latest news on foreign radio stations.

"Nobody from my neighborhood heard about the airport because we do not have power at home, so the television and the radio do not work," said one man sipping tea in a snack bar on the corner of central Saadun street.

"I just learned about it when I came here this morning," he said.

The owner of the snack bar interrupted the conversation to add: "I will only believe it when I see it. The Americans cannot be in Baghdad after all the heroic Iraqi resistance we saw on television."

The state television, the sole channel for most Iraqis, has this week come under continual missile attack.

Telephones have been cut since a series of telecommunication centers also came under attack by US and British warplanes.

As electricity was still cut in Baghdad, a lack of generators and water has prevented the opening of many bakeries and gas stations, with just a few of them offering gas to long queues of cars.

The Shorja central market place was crowded on Friday.

Hundreds of people were circulating on the main avenue and small alleys where street vendors were now selling small generators on the sidewalk as well as electrical wires, masking tape, disposable plastic ware and water containers.

"I used to sell furniture in this shop, but a few days ago I did a little recycling operation," said Ahmad Jassem.

"I took all the furniture out, and brought all these jerrycans, water tanks and coolers because we are in a war and this is what we need now," he said.

A few yards (metres) down the road, the outdoor pet market was also very busy.

But people were not buying pets or birds. Most were fighting for the chickens.

"We do not have refrigerators anymore, so we need to keep chickens alive in our backyard," said housewife Fatima al-Khafaji.

Friday is the weekly day of rest in Iraq and pious Muslims were seen converging on mosques across the capital for prayers.

"Today, I am going not just for the Friday prayers, I am going to make a wish to God to protect us against the invaders," said Hajj Ali, as he headed to the al-Kazhem shrine.

As temperatures shot up to nearly 30 degrees C (86 F), the Iraqi dinar that has been on a rise since the start of the war, was trading at 3,500 against the dollar on Friday.

SPACE.WIRE