The turbulent central Iraqi city of Fallujah was mostly free of gunfire Monday in the second day of a truce. In the southern part of the country, the U.S. military said it was open to a negotiated solution in its showdown with a radical Shiite cleric.

In Fallujah (search), Iraqi politicians and city officials held talks Monday with insurgent leaders. With more U.S. forces maneuvering into place, the military warned it would launch an all-out assault on the city if talks fell through and violence continued.

In the south, members of the Iraqi Governing Council have reportedly held talks with followers of radical anti-American Shiite cleric Muqtada al-Sadr (search), who raised a bloody revolt last week and took control of the cities of Karbala, Kufa and Najaf.

Later Monday, al-Sadr pulled his militiamen out of police stations and government facilities in Najaf, his representative said.

"Al-Sayed al-Sadr issued instructions for his followers to leave the sites of police and the government," said lawyer Murtada al-Janabi.

U.S. Army Lt. Gen. Ricardo Sanchez said he did not know where al-Sadr was, but noted he was last known to be in Najaf. Iran denied rumors that al-Sadr had sought asylum in that country.

"The mission of U.S. forces is to kill or capture Muqtada al-Sadr," Sanchez said.

U.S. commanders demand that control of Iraqi police and U.S.-led coalition forces be restored in cities that have seen marked violence in the past few weeks. U.S. forces also want enemy fighters in Fallujah to lay down their arms and hand over Iraqis who killed and mutilated four American civilians on March 31.

On Sunday, President Bush prepared Americans for the possibility of more casualties in the Mideast nation. About 70 U.S. soldiers have been killed across Iraq since April 4, including six U.S. military personnel on Sunday.

"It was a tough week last week and my prayers and thoughts are with those who pay the ultimate price for our security," Bush said.

Meanwhile, in other news:

— Arabic satellite news station Al Jazeera reported that 11 Russians had been kidnapped in Baghdad. Three Czech journalists were still missing and believed abducted.

— Seven U.S. contractors with Kellogg, Brown & Root and two U.S. soldiers have been "unaccounted for" since a recent insurgent attack on a U.S. fuel convoy, the U.S. military said. American Thomas Hamill, whose captors said they would kill him if Marines didn't withdraw from Fallujah by early Sunday, is one of the missing.

— Insurgents released nine hostages, including Turks and Pakistanis, but there was no word on three Japanese civilians still being held. Seven Chinese workers taken from Fallujah were later released.

— A convoy of flatbed trucks carrying M113 armored personnel carriers was attacked and burned on a road in Latifiya, 20 miles south of Baghdad. Witnesses said three people were killed.

— A supply truck was ambushed and set ablaze on the road from Baghdad's airport. Looters moved in to carry away goods from the truck as Iraqi police looked on.

— Germany urged all of its citizens to leave Iraq after two German security guards were killed on a highway there last week. Two Danish relief groups, the Danish Refugee Council and the Dan Church Aid, pulled their pulled their workers out of Iraq.

Deadly Week in Iraq

The military has been trying to regain control of supply routes after several convoys were ambushed and at least 10 truck drivers were kidnapped. Nine were released, but Hamill remains a captive.

"Over the past 24 hours we have put significant amount of combat power on both areas of operation to open up those lines of communication so we can not only resupply our forces in Fallujah, Ramadi and our forces down south, but also make those roads safe for travel," U.S. Brig. Gen. Mark Kimmitt said from Baghdad Monday. "They're at a condition that we would call amber; it is certainly not green yet."

Doctors said 600 Iraqis, including many civilians, were killed in the past week's efforts to root out Sunni insurgents in Fallujah, which has proven to be one of the most hostile cities to U.S.-led forces.

Around 700 Iraqi insurgents have been killed in fighting across Iraq since April 1, but there is no reliable figure on Iraqi civilian deaths, Kimmitt said.

"We would ask the Ministry of Health, once Iraqi control ... is allowed back in Fallujah, they can get a fair, honest and credible figure and not one that is somehow filtered through some of the local propaganda machines," Kimmitt said.

A bloody uprising by a radical Shiite militia started April 4 and U.S. forces began going after Sunni insurgents in Fallujah early April 5.

Bush said the United States was "open to suggestions" on reducing the violence in Fallujah.

Sanchez said a battalion of the Iraqi army refused to fight in Fallujah.

"This one specific instance did in fact uncover some significant challenges in some of the Iraqi security force structures," Sanchez said. "We know that it's going to take us a while to stand up reliable forces that can accept responsibility."

Coalition Continues to Battle al-Sadr's Militia

One factor that has held off U.S. action to uproot al-Sadr's al-Mahdi Army (search) militia was the presence of up to 1.5 million Shiite pilgrims in Karbala for Sunday's al-Arbaeen ceremonies, one of the holiest days of Shiism's religious calendar. Most pilgrims had left the city by Monday morning.

U.S. coalition spokesman Dan Senor would not comment on Iraqi talks with al-Sadr's followers but added, "I would say that our goal is to minimize bloodshed and to head off any sort of conflict."

"We don't see it as a necessary requirement that any military action has to occur in Najaf," Kimmitt said.

U.S. troops retook the city of Kut from al-Sadr followers in the past three days.

The goal of the separate talks in Fallujah and in the south — all conducted by Iraqis, with no Americans participating — was unclear.

Fate of Fallujah

In Fallujah, hardly a shot was heard Monday morning, more than 36 hours after insurgents in the city said they were calling a cease-fire. The Marines have halted offensive operations since Friday but still were coming under enemy fire.

Marines on Sunday investigated a bomb-making factory first uncovered three days earlier. Along with five homicide belts found in the initial raid, they uncovered U.S. military uniforms, suggesting homicide bombers may try to use them to get close to American forces, said Lt. Col. Brennan Byrne.

Byrne said Marines would not withdraw from Fallujah. "Diplomacy is just talk unless you have a credible force to balk it up," he said. "People will bend to our will if they are afraid of us."

Although the director of the city hospital said most of the Iraqis killed in Fallujah were women, children and elderly, Byrne said he was confident troops in his 1st Battalion, 5th Regiment had not killed any civilians.

"Just because (the Iraqis) say it's so, doesn't meant it's so," he said. "Remember the enemy owns this city and the enemy has an interest in manipulating the situation if they can weaken our position."

The Associated Press contributed to this report.