WASHINGTON (Reuters) - Iraqi protesters entered the Iranian consulate compound in the holy city of Najaf on Wednesday and set the entire building ablaze as a "symbolic blow" to Iran, the New York Times said.

The newspaper said in a report from Baghdad that Iran attaches great importance to the city southwest of the capital Baghdad, which includes important Shiite shrines.

The police and civil defense sources said that the protesters entered the consulate compound late yesterday and set fire to the entire building, and police managed to disperse the protesters with tear gas canisters. The army sealed off all the entrances and exits of the city of Najaf and isolated it from the rest of the country.

The New York Times report said many of Iraq's political parties, which dominate parliament, have ties to Iran. The newspaper quoted the religious authority in Najaf, Sheikh Fadhil al-Budeiri as saying that the attack sends a clear message that a segment of Iraqi society rejects the Iranian political presence and holds Tehran responsible for pushing the current government to power.

They are all Shiites
According to the newspaper, it is noteworthy that the demonstrators in Najaf, almost all Shiites, and that the religious authorities in the Shiite city encouraged those protests and urged them to peaceful.

Top cleric Ali al-Sistani faces enormous pressure to resolve the crisis between protesters and the government. While staying away from direct interference in politics usually affects him, this time he urged the government to exercise restraint and advised protesters not to resort to violence.

Many analysts predicted that Iran would put pressure on the Iraqi government to force it to respond firmly to the Najaf attack.

"The occurrence of such a thing in Najaf has a significant symbolic significance for the Iranians," Abbas Kazem, director of the Iraq Initiative program at the Atlantic Council in Washington, was quoted as saying.

She said analysts from the conservative Iranian current saw a link between the attack on the consulate and popular demonstrations in Iran, and they blamed both cases on foreign powers.