US troops have allegedly shot dead two young Iraqi sisters near Baqubah, north of Baghdad.

Iraqi police and family members say American troops shot the 12-year-old and 15-year-old as they were collecting wood from a field.

The older girl died on the spot and her sister died later of her wounds.

A policeman claims that US forces handed one of the girls' bodies over to the police "arguing that she had a gun in her possession".

Police searched the family home but found nothing suspicious.

Coalition forces in Iraq are investigating claims, but have declined to make further comment.