Kidnappers freed two Japanese hostages in Baghdad last night, but the standoff in the southern city of Najaf showed no sign of easing and rebel cleric Moqtada al-Sadr's spokesman declared negotiations were stalled.
Guns fell silent in Falluja, west of Baghdad, where air strikes and clashes have punctuated a shaky truce, but a US spokesman said time was running out for talks aimed at ending fighting there between rebels and US Marines.
In Najaf, the Shi'ite holy city where US troops are massing and Sadr and hundreds of militiamen are holed up, Sadr's spokesman said: "If the Americans attack Najaf this will be zero hour and mass revolution...a Shi'ite-American confrontation."
US officials say Sadr, who is wanted in connection with the murder of a moderate Shi'ite cleric a year ago, must not only face justice in an Iraqi court but also disband his forces.
The two Japanese, Mr Jumpei Yasuda and Mr Nobutaka Watanabe, were unshaven and looked tired but in good health as they were handed over to Japanese diplomats at Baghdad's Um al-Qura mosque.
Insurgents have seized more than 40 foreigners this month. Most have been released, though an Italian has been executed and his captors have threated to kill three more taken with him unless Italian troops pull out of Iraq.
Italy has refused and Arab television station al Jazeera broadcast an appeal from the families of the three others, begging for their lives to be spared.
"We are simple people like yourselves. We appeal to your religious consciences as believers," said Antonella Agliana, whose brother Maurizio is one of the three.
US President George W. Bush and British Prime Minister Tony Blair vowed in Washington on Friday to stamp out violence in Iraq, where US-led forces are battling guerrillas in Sunni central Iraq and trying to snuff out the revolt by Sadr's Shi'ite militia in the south.
In mostly Sunni Falluja, a leading American official, Richard Jones, joined week-old peace talks with city leaders, senior US spokesman Dan Senor told a news conference.
"We are hopeful about their intentions," he said of the local leaders. "Our overriding question is can they deliver and, if so, can they do so expeditiously? Time is running out."