Bush holds out prospect of Iraq troop cuts

By Matt Spetalnick

WASHINGTON (Reuters) - U.S. President George W. Bush on Thursday held out the prospect of further troop reductions in Iraq later this year as he hailed a new "degree of durability" in security gains there.

Seizing on the latest signs of progress on the ground, Bush delivered perhaps his most upbeat assessment since the early stages of the unpopular 5-year-old war, now a central issue in the U.S. election campaign to pick his successor.

"This has been a month of encouraging news from Iraq," Bush said in a hastily arranged White House appearance. "Violence is down to its lowest level since the spring of 2004, and we're now in our third consecutive month with reduced violence levels holding steady."

He said commanding Gen. David Petraeus and U.S. Ambassador Ryan Crocker had cautioned that the progress is still reversible but "they report that there now appears to be a degree of durability to the gains that we have made."

Normally careful to avoid talk of troop drawdowns, Bush suggested he would be open to the idea if trends continue.

"Later this year, Gen. Petraeus will present me his recommendations on future troop levels -- including further reductions in our combat forces as conditions permit," Bush said.

Bush's status report on the war came as U.S. military deaths in Iraq fell sharply in July, with the monthly total likely to be the lowest since the U.S.-led invasion of the country in 2003.

Five U.S. soldiers have been killed in combat in Iraq this month compared with 66 in the same month last year, according to the independent website www.icasualties.org, which keeps records of U.S. military losses in the conflict.