Police also found 15 bullet-riddled bodies across Baghdad of men shot execution style in apparent sectarian bloodshed.
Iraqi troops are battling sporadic gunfire from insurgents in Baghdad’s Sunni stronghold of Adhamiyah where the army was conducting search operations.
The army, along with US forces, yesterday fought a group of 50 gunmen in the neighbourhood. Five rebels were killed and seven captured after a seven-hour battle.
Dozens of militants appeared to have escaped however and others continued to attack the troops as they conducted house-to-house searches for the second day, an interior ministry official said.
The city of Ramadi, the capital of the western Al-Anbar province, also remains tense.
US troops came under massive attack on Monday, with several car bombs shaking the heavily fortified government building that houses a marine base and provincial government offices.
The marines came under fire from a nearby mosque, the military said, adding that it was the fourth time in a month that the place of worship had been targeted by the rebels.
Nearly 50 US troops have been killed across Iraq since April 1, marking one of the bloodiest periods for the military since the invasion.
Car bombs explode
Meanwhile a car bomb exploded near the Abbas al-Hassad Shi’ite mosque in southern Baghdad, injuring three people, an interior ministry official. The explosion was followed minutes later by another near the Al-Rasool Shi’ite mosque in the north of the capital.
Elsewhere six people were killed in rebel attacks.
As the violence surged, bickering politicians renewed warnings that talks on forming a government of national unity that have dragged on for four months could take another month amid new disputes among rival factions.