A homicide car bomber killed 40 and wounded 30 Monday at an Iraqi army recruiting office outside a military base near Tal Afar, as top Iraqi politicians blamed the United States for a weekend raid that Shiites said killed 22 worshipers in a mosque.

The U.S. military acknowledged a raid had been carried out in northeast Baghdad Sunday but said no mosque was attacked. Iraqi officials angrily disputed the U.S. account and called off political talks until an investigation could be carried out.

The bombing attack about 18 miles east of the northern city of Tal Afar targeted Iraqi army recruits and the U.S. military said no American troops were hurt.

Iraqi authorities said the dead and injured were Iraqis who were lining up to apply for positions in the Iraqi army. Many of the injured were taken to the Sykes U.S. Army base.

In continuing sectarian violence, at least 21 more bodies were found and Iraqi police said many were handcuffed, blindfolded and had ropes around their necks.

In the capital, a bomb exploded in a bus headed for the Sadr City slum, killing two passengers and wounding four others, police Col. Hassan Jaloob said. The bomb had been left in a bag, he said.

Iraqi Interior Minister Bayan Jabr said innocent worshipers were killed when the Mustafa mosque was attacked around sunset on Sunday.

"Entering the Mustafa Shiite mosque and killing worshipers was unjustified and a horrible violation from my point of view," Jabr said in a televised interview. "Innocent people inside the mosque offering prayer at sunset were killed."

Jawad al-Maliki, a lawmaker from the United Iraqi Alliance, said Monday's session of negotiations to form a new government was canceled because of the raid.

"We suspended today's meetings to discuss the formation of the government because of what happened at the al-Moustafa mosque," al-Maliki said.

The U.S. military said in a statement that a compound consisting of several buildings was the focus of the raid and that "no mosques were entered or damaged."

The military said 16 insurgents were killed and three others wounded during a "house-to-house search on an objective with multiple structures." Another 18 individuals were detained and a weapons cache was found, the statement said.

Iraqi police said gunmen fired on the joint U.S.-Iraqi patrol from a position in the neighborhood but not from the mosque. Police and representatives of radical Shiite cleric Muqtada al-Sadr, who holds great sway among poor Shiites in eastern Baghdad, said all those killed were in the complex for evening prayers and none was a gunman.

Lt. Col. Barry Johnson, a U.S. military spokesman, said the operation was launched after observation of the site convinced the military it was being used as a kidnapping cell.

"In our observation of the place and the activities that were going on, it's difficult for us to consider this a place of prayer," Johnson said. "It was not identified by us as a mosque, though we certainly recognized it as a community gathering center. I think this is, frankly, a matter of perception."

Hundreds of people turned out for the funerals of those killed in the raid. The mourners, many carrying Iraqi flags, walked alongside coffin-laden trucks.

President Jalal Talabani said he called U.S. Ambassador Zalmay Khalilzad and they decided to form an Iraqi-U.S. committee to investigate the attack.

"I will personally supervise, and we will learn who was responsible. Those who are behind this attack must be brought to the justice and punished," Talabani said.

Later Monday, gunmen kidnapped 16 employees of an Iraqi trading company, an Interior Ministry official said. The men arrived at the headquarters of the Saeed import and export company in four civilian cars and appeared to rifle through papers and computers before driving away with the employees, Lt. Col. Falah al-Mohammadawi said.

Also, gunmen kidnapped a university president after barging into his home in Ramadi, 70 miles west of Baghdad, a relative said. Four men grabbed Anbar University chief Abdul Hadi Rajab al-Hitawi and shoved him into a black car, said his brother-in-law, Khaldoun al-Ani.

The Associated Press contributed to this report.