A shootout in the Iraqi desert

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Kurdish peshmerga forces clashed with Islamic State fighters south of Iraq's strategic oil city of Kirkuk late on Tuesday (November 25) and continued into Wednesday (November 26) morning, Peshmerga sources said.

They said that IS militants attacked Peshmerga positions in Tel Al-Ward, Mullah Abdullah, Khaled Office districts, about 20 km (12 miles), south of Kirkuk city, 90 km (60 miles) north of the capital Baghdad.

Fighting continued through Wednesday and U.S. military hit targets of the militants in the area, they said.

The group launched a lightning advance through northern and central Iraq in June, declaring an Islamic caliphate.

With the help of U.S. air strikes, Iraq's army and Kurdish forces have been able to push the fighters back from some areas.

IS insurgents battled Iraqi forces in the centre of Baiji on Tuesday, a week after the army broke their prolonged siege of the country's largest oil refinery just o