The bodies of 37 Iraqi soldiers shot dead northeast of Baghdad were found Saturday and 12 more corpses discovered on Sunday, police and officials said.

"They were all executed, we found them executed," Interior Ministry spokesman Adnan Abdul-Rahman said.

The attack was another blow to the efforts of the interim government to develop Iraq's fledgling security forces to tackle a raging insurgency that US-led forces have failed to quell. The soldiers, based at Kirkush, 55 miles northeast of Baghdad, had been in civilian clothes, heading for home leave in three minibuses when they were ambushed.

Police said insurgents appeared to have forced them to lie on the road before shooting them. The minibuses were burned.

A senior security official, who asked not to be named, said most of the soldiers had been from the mainly Shia Muslim cities of Basra, Amara and Nassiriya in southern Iraq.

"It appears that they were ambushed by a large, well-organized force with good intelligence," the source said.

Insurgents have frequently targeted Iraqis seen as cooperating with the US military or the interim government.

The headless body of an unidentified man in a business suit was found Sunday with feet tied, floating in the Tigris River near the northern city of Kirkuk, police said.

The body was the fourth to be recovered from the area in the past two months. The other three appeared to have been Iraqis working with US forces, police said.

Iraqi security forces have taken a more visible role in counter-insurgency operations in recent months and the US- backed government sees them as a key weapon in its drive to win back control of all rebel areas before elections in January.

US DIPLOMAT KILLED
A US embassy spokesman said a diplomatic security officer had been killed by "indirect fire" about 5 a.m. on Sunday at Camp Victory, a sprawling US military headquarters near the airport which comes under frequent rebel attack.

"I mourn the loss of one of our own today in Baghdad. Assistant Regional Security Officer Ed Seitz... was a brave American, dedicated to his country," Secretary of State Colin Powell said in a statement.

Seitz was the first American diplomat known to have been killed in Iraq since last year's US-led invasion.

US warplanes pounded targets in Falluja, the toughest guerrilla stronghold, yesterday, killing five people, witnesses said. Hospital officials said the dead were civilians.

The US military said a "precision" strike had destroyed a known enemy command and control post in northern Falluja.

US forces have stepped up air strikes and other attacks in the city west of Baghdad in a campaign they say is aimed at insurgents and foreign fighters led by Jordanian militant Abu Musab al-Zarqawi, who has a $25 million US bounty on his head.

Falluja residents say most of the victims of the raids are civilians and deny any knowledge of Zarqawi, who has claimed responsibility for hostage beheadings, suicide bombings and other attacks.

Insurgent commanders in Falluja said they were not holding foreign hostage Margaret Hassan and condemned her kidnapping.

"This woman works for a humanitarian organization. She should not have been kidnapped," said the emir, or commander, of one guerrilla group, who asked not to be named.

Commanders of five separate guerrilla groups interviewed in Falluja said they were not holding Hassan and had seen no evidence that Zarqawi's organization had kidnapped her.

"She had been living in Iraq for 30 years and she was a humanitarian. The resistance did not kidnap her because this would have left a bad impression of the resistance in the world," said another commander.