As US and Iraqi troops took over more of Fallujah, the head of Iraqi forces there said they had found 'slaughterhouses' where other hostages had been held and killed in the past, along with records of victims and hundreds of CDs.
But Major General Abdul Qader Jassim told reporters he did not say if any remains had been found or if there was any clue to the fate of at least nine foreign hostages still missing.
Yet more captives appeared to have been taken when rebels released a videotape showing what they said were 20 Iraqi National Guards troops seized in Fallujah.
Air strikes, shelling and mortar fire shook Fallujah during intense clashes interspersed with periods of relative calm, a Reuters reporter in the city said. US forces said they bombed a mosque after coming under fire from within.
The military said US and Iraqi troops had "fought their way through half of the city, including the Jolan district, suspected of being the epicentre of insurgent activity".
The US Marine commander at Fallujah, Lieutenant General John Sattler, told reporters his opponents had been reduced to small groups, unable to co-ordinate their movements: "They are now in small pockets, blind, moving across the city.
"We will continue to hunt them down and destroy them."
PREMIER'S COUSIN ABDUCTED: Prime Minister Iyad Allawi's 75-year-old cousin Ghazi Allawi, the cousin's wife and their daughter-in-law were abducted near their home in Baghdad on Tuesday, Allawi's spokesman said.
The previously unknown Ansar al-Jihad group said the hostages would die unless Allawi, "head of the Iraqi agents", halted the US-led Fallujah offensive and freed prisoners. "If the agent government does not meet our demands within 48 hours we will behead them," it said in a statement dated Wednesday and posted on a Web site.
Allawi's office said in a statement policy would not change. "This is yet another criminal act by terrorists and will not thwart the determination of the government to combat terrorism."
The three were abducted a day after Allawi ordered the full-scale assault by US and Iraqi forces to rid Fallujah of rebels and suspected foreign fighters to pave the way for nation-wide elections planned for January.
HOSTAGE SLAUGHTERHOUSES: Allawi and his US-backers say al Qaeda ally Abu Musab al-Zarqawi and other rebels had turned Fallujah into the epicentre of insurgency, from where bombings, killings and kidnappings aimed at forcing out foreigners were directed. "We have found hostage slaughterhouses in Fallujah that were used by these people and the black clothing that they used to wear to identify themselves," General Jassim told reporters.
He did not link the finds to Zarqawi, whose group has claimed several hostage beheadings.
Nor could he say if the records listed any of at least nine foreign hostages still missing: "I did not look that closely."
Among missing are British-Iraqi aid worker Margaret Hassan, Polish-Iraqi woman Teresa Borcz Khalifa, French journalists Georges Malbrunot and Christian Chesnot and two Americans.
Apparently losing ground in Fallujah, rebels staged several attacks across Iraq, some striking in their boldness.
At least nine civilians were killed and 24 wounded in fighting in Baiji, 180km north of Baghdad and there were running battles in Mosul and parts of Baghdad.
Armed men surged in on the east, north and west of the main northern Iraqi city of Mosul on Wednesday while the police stayed in their station, an AFP reporter in the majority Sunni city said.
Gunmen stopped traffic and blocked a bridge in the west of the capital, where a 48-hour closure of Baghdad International Airport was extended by another day.
Seven people were killed in a bombing in Baghdad. Two roadside bombs just to the north killed six Iraqi National Guards and, separately, a US soldier. A policeman was killed and two wounded in a similar attack near Samarra.
Gunmen killed a Turkish truck driver near Baiji.
The US military said 11 American troops and two Iraqis had been killed at Fallujah since 10,000 US soldiers and Marines and 2,000 Iraqi troops launched the offensive on Monday night.
It said the city's mayor's office had been captured at about 4:00 am. Key bridges, civic buildings, mosques and weapons caches had also been seized. The firepower raining down on Fallujah must have caused civilian casualties, but no clear figures have emerged. The International Committee of the Red Cross said it was "very worried" about the plight of the wounded in Fallujah. An ICRC spokesman said thousands of civilian fugitives from Fallujah needed water, food, medical care and shelter. Local people say children have been among those killed.