Iraq accused Turkey on Saturday of “intensive shelling” of its northern Kurdish region this week, adding it had handed the Turkish envoy in Baghdad a protest letter over the matter.
"The foreign ministry delivered a letter to the charge d'affaires of Turkey protesting the bombardment of Iraq around Dohuk and Arbil which caused huge damage, fire and spread panic among the people," an Iraqi foreign ministry statement said.
A ministry spokesman further said the shelling took place over three hours late on Wednesday and early Thursday.
The spokesman stopped short of precisely identifying the damage. It was the first official mention of cross-border shelling by the Turkish army.
Financial markets were rattled by a report late on Wednesday that Turkey had launched a major incursion across the border into northern Iraq to crush Kurdish rebels. Ankara, Washington and even the rebel Kurdistan Workers Party (PKK) denied the report.
A Turkish military source said, however, troops had conducted a limited raid, a rare incursion into northern Iraq where 4,000 rebels of the outlawed PKK are said to be hiding.
Turkey says the PKK, whose two-decade-old insurgency in eastern and southeastern Turkey has claimed more than 37,000 lives, is acting under the protection of Iraqi Kurds allied to the United States.
Violence increased with the spring thaw as rebels hiding in the rugged mountains of northern Iraq slipped back across the border to attack Turkish troops, effectively ending a unilateral ceasefire the PKK proclaimed in October 2006.
Turkey launched several cross-border operations into Iraq in the 1990s, but failed to dislodge the PKK rear-bases.
It maintains a 1,500-strong troop presence several kilometers (miles) inside Iraq to try to stem the flow of PKK fighters across the mountainous 384-kilometer (240-mile) border.
Turkey has repeatedly demanded tougher action from Iraq and the United States against the rebels and has refused to rule out acting unilaterally if its demands are not heeded.
Turkish concerns have been further raised by proposals to incorporate the oil hub of Kirkuk in the Kurdish autonomous region in northern Iraq which are to be put to referendum by the end of the year.
Turkey fears that Kurdish control over Kirkuk's oil fields might sow the seeds of an independent state and fan nationalist sentiment among its own much larger Kurdish minority.
But the United States has strongly opposed any unilateral action by Turkey for fear that it may destabilize the relative tranquility of northern Iraq.