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The tremor, which struck before dawn as most of the city's 200,000 residents were asleep, has launched a major international relief effort.
Dozens of bodies littered the streets of the city, built almost entirely of mud brick and ill-equipped to withstand a big temblor, an AFP correspondent said.
The state news agency IRNA quoted Mohammad Ali Karimi, governor of Kerman province, as telling Iranian President Mohammad Khatami over the telephone that 5,000 to 6,000 people had died.
State television had earlier said 4,000 people had died and that another 30,000 were injured.
The Iranian embassy in Paris issued a statement putting the figure at 10,000, quoting "initial estimates."
Bereaved residents wandered the streets pleading for the authorities to speed up rescue efforts.
"Seventeen of my relatives are buried under the ruins of my home, they've got to get a move on or all of them will die," said one, who gave his name only as Ali, as he attempted to shift the rubble with a spade.
"Why is help so slow in coming? If we were in the West, all resources would have been mobilised," said one survivor.
"We have neither water nor food," said an old woman, whose black veil was almost white with the dust that enshrouded everyone from head to foot.
But anger was beginning to kick in among the survivors, livid at the sluggish rescue mission.
Provincial governor Karimi said: "One thing is sure: the historic quarter of Bam has been completely destroyed and many of our countrymen are underneath the ruins.
"The situation is very worrying," he told IRNA.
Interior Minister Abdolvahed Mussavi-Lari said the top "priority is to get help to the injured who are under the rubble. It is very cold in the region, and we are very concerned" for them.
"Our second priority is to get the wounded to hospitals in the region," the minister said, adding that five military aircraft were shuttling between Bam and Kerman.
More than 90 percent of the old city was destroyed.
Besides the flattened homes, the historic centre of Bam with its 2,000-year-old citadel, once the largest mud-brick structure in the world, was gone forever.
Funerals had already been held for 2,000 of the dead in accordance with the Islamic requirement for a swift burial, IRNA reported.
At least another 400 people, most of whom are seriously injured, had been evacuated to hospitals across the region, it added.
A three-day period of mourning was declared in Bam's shocked Kerman province, as state media and authorities broadcast urgent appeals for blood donations, blankets, food and clothes to deal with the catastrophe.
Hundreds of people crowded into Tehran hospitals Friday, volunteering to give blood to help the thousands of injured.
Iran also quickly appealed for international aid.
"We need sniffer dogs and detection equipment, blankets, medicines, food, but also prefabricated houses because winter is coming very quickly," an interior ministry statement said.
Belgium, Germany, Spain, Greece, Russia and Turkey were among the first to respond.
The United Nations was dispatching two aid experts to Iran later in the day, said Madeleine Moulin, a spokeswoman for the UN Office for the Coordination of Humanitarian Affairs (OCHA). Four more experts were due to fly out on Saturday, she added.
And the foreign ministry in Israel, which Iran considers to be one of its greatest enemies, announced that Israeli non-governmental organizations are "looking into offering their help."
The quake hit at 5:28 am (0158 GMT), some 1,000 kilometres (620 miles) southeast of the capital, with a magnitude of 6.3 degrees on the Richter scale, IRNA quoted the Tehran University Geophysics Centre as saying.
Several aftershocks were recorded, the most violent occurring at 6:36 am (0306 GMT), IRNA said.
The Strasbourg Observatory in France put the quake at 6.6 and said the temblor was the most powerful in the region since 1998.
The US Geological Survey National Earthquake Information Center in Virginia measured it at 6.7, with the epicentre at a depth of 33 kilometres (21 miles).
The historic centre of Bam was one of the wonders of Iran's cultural heritage.
Telephone and radio communications with the city, as well as the towns of Giroft and Kohnuj, were cut off following the quake.
The government has set up a crisis centre in Kerman, 200 kilometresmiles) north of Bam, dispatching five helicopters and two huge C-130 transport planes to the quake site, IRNA quoted deputy provincial governor Hossein Marachi as saying.
Authorities urged the population not to leave the disaster zone unless seeking urgent medical assistance, public radio reported.
Earthquakes are very frequent in Iran. Since 1991 nearly 1,000 of them have claimed some 17,600 lives and injured 53,000 people, according to official figures.
On August 27, a tremor of 5.7 jolted the Bam area, but caused no casualties.
The last major quake came in June, 2002, when a tremor of 6.3 hit northwestern Iran, killing 235 people and wounding more than 1,300.
In June 1990, nearly 40,000 were killed in Gilan and Zanjan provinces, in a massive tremor measuring 7.7.
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