Heavy fighting has erupted between US troops and Shia militiamen in Baghdad's Sadr City slum.
US-led forces are attempting to crush militants loyal to the Shia cleric Moqtada al-Sadr and take control of Iraq before elections scheduled for January.
Witnesses said American AC-130 aircraft pounded suspected rebel positions in Sadr City, but there was no immediate word on casualties and the US military said it had no information on the fighting.
Residents said they could hear the sound of AC-130 rapid-fire cannons as blasts shook Sadr City, home to more than two million people. One said he saw at least 12 tanks moving into Sadr City late on Monday.
Helicopters could be heard in Baghdad heading in the direction of Sadr City.
The fighting came after the car bomb attacks brought more carnage to the streets of two Iraqi cities as the interim government struggles to stamp out the insurgency ahead of nationwide polls.
More than 100 people were wounded as bombers struck twice in Baghdad and once in the northern city of Mosul.
In the first Baghdad blast, a car blew up near an entrance to the heavily fortified Green Zone, home to the interim government, killing at least 15 people and wounding 80, a hospital official said.
A second bomb exploded about an hour later as a US military convoy passed along Sadoun Street, a major thoroughfare east of the Tigris river, where several hotels used by foreign contractors are located. No US troops were killed or wounded.
In Mosul, a car bomb exploded outside a primary school, killing five people, including two children, police said.
Islamic militants distributed a video to an international news agency showing the killings of two men who identified themselves as an Italian of Iraqi origin and a Turk. A militant in the video accused the two of spying.
They were shown blindfolded and kneeling in front of a ditch before being shot.
However, two Indonesian women who had been held hostage by an Iraqi militant group were handed on Monday to the United Arab Emirates embassy in Baghdad, Abu Dhabi Television reported.