WASHINGTON (Reuters) - The U.S. State Department said on Sunday it was watching developments in the disputed region of Kirkuk and was  very concerned  about reports of a confrontation, after Iraqi government forces clashed with Kurdish Peshmerga.  We are monitoring the situation in Kirkuk closely and are very concerned by reports of a confrontation,  a State Department official said.  We are engaged with all parties in Iraq to de-escalate tension.  The Iraqi government earlier said its forces took control of  vast areas  in the Kirkuk region, including oilfields west of the city, in the early hours of Monday, Iraqi state TV said. However the Kurdistan Regional Government disputed the assertions.   