A bomb claimed by a little-known Sunni Arab extremist group killed at least 37 Shiites and wounded another 40 in Baghdad on Saturday as they stocked up fuel for Ramadan, just days after the U.S. military warned sectarian violence would surge during the Islamic holy month.

Al Qaeda in Iraq's leader also reappeared in an old video posted on the Internet just as Sunni Arabs declared the start of Ramadan.

Abu Ayyoub al-Masri, also known as Abu Hamza al-Muhajer, was shown killing a Turkish hostage — a possible signal to his Sunni Arab followers. in Early September, he had called on Sunnis to step up attacks against American forces.

An American soldier was killed in a roadside bomb attack in northern Baghdad, the U.S. command said. No further details were available.

A Danish soldier was also killed and eight others were injured by a roadside bomb in southern Iraq Saturday, the army said. He was the fourth Danish soldier to die in Iraq since the U.S.-led invasion.

Iraq's armed forces said they made some headway against groups affiliated with Al Qaeda in Iraq, announcing the arrest of a senior leader of Ansar al-Sunnah — a radical Sunni group responsible for deadly attacks against U.S. forces, kidnappings and beheadings.

A Sunni extremist group, Jamaat Jund al-Sahaba — or Soldiers of the Prophet's Companions — claimed responsibility for the attack against Shiites in Sadr City, a sprawling slum that is home to more than two million people and a stronghold of radical Shiite cleric Muqtada al-Sadr.

The group said it carried out the bombing to retaliate for a Friday attack by a death squad against Sunni Arab homes and mosques that killed four people in a mixed Baghdad neighborhood.

The Sadr City bombing occurred as a large crowd gathered behind a kerosene truck as families sought to stock up on fuel for Ramadan, during which people gather just after sunset for a communal meal to break a daylong abstention from food and water, police said.

Dhiyaa Ali, a 24 year-old college student, said he heard the explosion from his nearby home and ran to the street to help people. He said bodies and blood were everywhere.

"I went into the flames just to get anyone left out of the fire," he told The Associated Press. "I saw a mother holding her child, both of them burned and dead."

The attack came on the first day of Ramadan for Sunni Arabs. Shiites and the government they dominate were expected to declare Sunday as the first day of Ramadan, a tangible sign of the differences separating the two Islamic sects.

The Jamaat Jund al-Sahaba extremist group blamed the Mahdi army for the attack that killed four in the northern Baghdad neighborhood of Hurryah, where a Shiite militia last week openly threatened members of the minority.

"This operation comes in retaliation for the crimes perpetrated by the Mahdi army against our Sunni people in Baghdad," it said warning of further attacks. The authenticity of the statement could not be independently verified.

Deputy Prime Minister Salam Zikam Ali al-Zubaie, a Sunni Arab, said the Hurryah attackers were dressed in police uniforms.

"There are some elements who have infiltrated the security system and who work according to the principle of blind revenge," he said in an announcement. "These elements violate all laws and calls for unity, peace and understanding instead of racial and sectarian cleansing."

He also warned residents of Baghdad to be careful of police impostors and those and "who forge official documents to deceive people."

A top U.S. general had warned in the days ahead of Ramadan that violence was expected to surge. Maj. Gen. William B. Caldwell also said a spike in attacks by al-Qaida in Iraq may be due to a threat issued on Sept. 7 by its leader Abu Ayyoub al-Masri, also known as Abu Hamza al-Muhajer.

A masked al-Masri also reappeared late Friday on a video and his execution of a Turkish contractor was the terrorist leader's first reported appearance since he took over al-Qaida in Iraq after America's June killing of Abu Musab al-Zarqawi.

The video was originally released Aug. 2, 2004, but none of the three militants on it were identified at the time. Despite its age, the video could be a new signal from al-Masri to his followers.

In one success against Al Qaeda in Iraq, Iraqi officials announced the arrest of a senior leader in the linked Ansar al-Sunnah group.

Muntasir Hamoud Ileiwi al-Jubouri and two of his aides were captured near Muqdadiyah, 56 miles northeast of Baghdad late Friday, Brig. Qassim al-Mussawi, spokesman for the General Command of the Armed Forces, told The Associated Press.

The Sunni militant group has claimed responsibility for numerous suicide attacks, the August 2004 execution of 12 Nepalese hostages and a December 2004 explosion at a U.S. military mess hall in Mosul that killed 22 people.

In northern Beiji, about 155 miles north of Baghdad, gunmen threw the decapitated heads of 10 Iraqi army soldiers into a popular open-air market, police said.

In Kut on Saturday, 100 miles southeast of Baghdad, eight apparent death squad victims were turned in to the morgue. They had been dumped into the Tigris river.