Two rocket-propelled grenades hit the Bourj al-Hayat in Central Baghdad early on Friday morning, but there were no casualties, said security guards with the foreign firms that use the hotel.

Staff working for the companies, contracted by the US-led occupation force in Iraq, are regular guests at the hotel.

"The first and fourth floors were hit. No one was wounded," said one of the guards from the companies. 

The attack happened at around 06:00 (03:00 GMT) on the hotel, which has cement barriers shielding it from the street.

Offices of the Kurdistan Democratic Party, the ruling party in the northern Iraqi provinces of Arbil and Dohuk, are in a neighbouring hotel.

One security guard described four men jumping out of an Opel car and firing two RPGs before speeding off.

A loud explosion was followed by several bursts of machine gun fire and then a second blast. A witness claimed the men were masked.

Guards said the hotel had previously been shelled with RPGs early on December 25, Christmas morning, and had been hit by heavy machine gun fire on December 18.

The US military considers foreign firms, contracted by the Coalition Provisional Authority, to be a target of the Iraqi resistance.