BAGHDAD (Reuters) - - Shi'ite and Sunni leaders sparred on Wednesday over a government order to lift U.S. checkpoints around a Baghdad militia stronghold as data showed the number of Iraqis killed in October may have hit a record high.

U.S. troops lifted roadblocks around the Shi'ite slum district of Sadr City on Tuesday when Prime Minister Nuri al-Maliki ordered them out, flexing his political muscle after a week of public friction with Washington ahead of U.S. elections.

Supporters of anti-American Shi'ite cleric Moqtada al-Sadr celebrated in the streets of Sadr City, bastion of his Mehdi Army. An aide hailed the end of a "barbaric siege" begun to help find a kidnapped U.S. soldier possibly being held by militiamen.

"I'm relieved Maliki is finally facing up to them," said Mustafa Ayyub, 22, a guard at a bank in the mixed Karrada district where checkpoints were also lifted.

"This is a peaceful area, the Americans have to learn not to punish 3 million people for the actions of three people."

But Iraq's Sunni vice president slammed the move, saying it could spell an end to a lull in sectarian death squad violence, which the once dominant Sunni minority blames on the Mehdi Army.

"I'm afraid that by lifting the siege the government sent the wrong message to those who stand behind terrrorism in Iraq. It says the iron fist will loosen and they can move freely," said Vice President Tareq al-Hashemi, a Sunni.

Khaled al-Attiya, the Shi'ite deputy speaker of parliament, said militias were not the main problem: "All the militias will disband at the end of the day but these are not the main enemy of the Iraqi people," he said.

"The main enemy are the Baathists and Saddamists who want to destroy the political process and the main principles of the constitution."

U.S. AND IRAQI CASUALTIES RISE

U.S. President George W. Bush's Republicans risk losing control of Congress next Tuesday when Americans vote in a ballot dominated by arguments about whether to keep 150,000 U.S. troops in harm's way as Iraq descends ever closer to all-out civil war.

The death of a U.S. soldier in the western Anbar province on Tuesday took the U.S. death toll in October at least to 104, the highest in nearly two years.

Data obtained from the Interior Ministry on Wednesday indicated the number of Iraqi civilians killed in violence may have risen to another record high in October.

Wednesday brought news of 10 bodies found dumped in Baghdad and several bombs that killed at least 10 people in the capital. In all, Reuters reporters recorded 37 violent deaths in Iraq.

Statistics issued by the Interior Ministry for Iraqis killed in political violence put civilian deaths last month at 1,289, nearly 42 a day and up 18 percent from the 1,089 seen in September, itself a record for this particular series of data.

Bloodshed intensified in the holy month of Ramadan, which ended last week, as rival Shi'ite and Sunni Muslim communities vied for power in a continuing cycle of sectarian reprisals.

Such figures have become increasingly controversial, notably since the United Nations put the monthly civilian toll at over 3,000 this summer and a group of medical statisticians estimated that over 650,000 may have died since the U.S. invasion of 2003.

U.S. and Iraqi officials question the U.N. estimate and the statistical survey published in the medical journal The Lancet.

Evidence of civilian casualties is scarce and collecting data fraught with danger. The Iraqi government has also lately tightened rules to prevent officials outside the prime minister's office releasing figures. (Additional reporting by Alastair Macdonald, Ibon Villelabeitia, Mariam Karouny and Aseel Kami in Baghdad)