MOSUL, Iraq (Reuters) - Seventeen soldiers died when guerrillas downed two U.S. helicopters in Iraq on Saturday, just hours after a faster timetable for self-rule was unveiled which Washington hopes will pacify Iraqi resentment.

A U.S. officer at the scene said one of the helicopters was hit on the tail by a rocket-propelled grenade. Witnesses said it then collided with another Black Hawk, and both crashed in a residential neighborhood in the northern city of Mosul.

"I was watching TV when I heard a large explosion," said local man Mohammad Badran. "I looked outside the window and saw two helicopters. One was flying low and was on fire. The other was higher up. The first one climbed and hit the higher one."

A U.S. Army spokeswoman in Baghdad said 17 soldiers were killed, five were wounded and one was missing. The army would not immediately confirm they were all American soldiers.

Five U.S. helicopters have now been brought down in the last three weeks, killing 39 soldiers.

Facing a mounting death toll and increasingly audacious guerrilla attacks, Washington has been pushing for a speedier transition to Iraqi self-government.

Iraq´s U.S. administrator Paul Bremer was recalled to Washington earlier this week for hastily convened talks on the situation in Iraq. On his return to Baghdad, the U.S.-appointed Iraqi Governing Council unveiled a new political timetable.

NEW TIMETABLE FOR DEMOCRACY

Jalal Talabani, current president of the council, said a sovereign Iraqi government would take over power from occupying forces by the end of June 2004.

The government would be selected by an assembly to be picked by May by caucuses in each of Iraq´s 18 provinces, and the U.S. -led Coalition Provisional Authority would be dissolved.

A constitution would be written and democratic elections held by the end of 2005, Talabani said.

"I am very happy and proud. The dream of the Iraqi people has been achieved today," Talabani said. Once sovereignty was transferred, "the state of occupation would end," he added.

While Iraq will no longer legally be in a state of occupation, Washington fully expects any new government to request a sizeable U.S.-led force to remain in the country.

"The presence of the forces of the United States and other countries will be discussed by the transitional government," Talabani said. "If we need them to stay, we will ask them to stay. If we don´t, we will respectfully ask them to leave."

In Washington, President Bush issued a statement welcoming the new timetable.

Adnan Pachachi, another member of the Governing Council, said Washington had answered Iraqi aspirations for self-rule.

"I think they have responded to our insistent desire that we should rule ourselves and we should have an elected government, and I´m very glad to see that our point of view and their point of view have coincided," he told a news conference.

GUERRILLA ATTACKS, SUICIDE BOMBINGS

Bush has said U.S. troops will stay until Iraq is stabilized. But more than seven months after U.S.-led invasion forces ousted Saddam Hussein, the country is far from calm.

Before Saturday´s crash of the Black Hawks, 160 U.S. soldiers had already been killed in action in Iraq since Bush declared major combat over on May 1, including a soldier killed on Saturday in a bomb attack in Baghdad.

U.S. forces in Baghdad have hit back with "Operation Iron Hammer," using air and ground strikes to destroy buildings they say were used by guerrillas in the capital.

The bodies of 16 Italian military personnel and two civilians killed in a suicide bombing in the southern Iraqi town of Nassiriya on Wednesday were returned on Saturday to Rome. They were met by grieving families and military honors.

Another soldier wounded in the blast died in Kuwait on Saturday. State funerals for those killed in Italy´s worst military disaster since World War II will be held on Tuesday.

A Portuguese radio reporter kidnapped in southern Iraq has been released unharmed, his station reported on Saturday.

Carlos Raleiras of private radio station TSF was released in the Iraqi desert a few miles from the Kuwaiti border, TSF said. It said he had contacted the station.

Raleiras was seized on Friday by gunmen who opened fire on a caravan of cars carrying Portuguese reporters. (© Reuters 2003 11/15/03)