The U.S. military stepped up its campaign against militant leader Abu Musab al-Zarqawi (search), launching an airstrike Saturday that pulverized a suspected hideout in Fallujah. At least 16 people were killed and several houses in the residential neighborhood were wrecked.

Brig. Gen. Mark Kimmitt (search), the military's deputy operations chief, said multiple intelligence sources suggested that "a significant number of people in the Zarqawi network" were in the house at the time of the attack.

U.S. officials said they did not know if al-Zarqawi was there.

Outraged residents gathered around the site after the explosions damaged eight homes in a poor neighborhood of the city. The Health Ministry said at least 16 people were killed, but witnesses said at least 20 people, including women and children, were killed.

Kimmitt said the attack set off ammunition and weapons stored in the safehouse, triggering "multiple secondary explosions" that could have caused some of the casualties and damage.

Residents, however, accused the United States of striking twice — the second time after rescuers moved into the site trying to pull out victims.

The surprise breakfast-hour strike was the first significant U.S. military move in Fallujah since April, when Marines backed away from a bloody three-week siege against insurgents holed up there. Since the U.S. forces left, residents have said extremist influence in the Sunni Muslim city, west of Baghdad, has grown.

Al-Zarqawi, a Jordanian-born militant believed to have ties to Al Qaeda (search), has been blamed for a string of car bombs across Iraq, including the Thursday blast that killed 35 people and wounded 145 at an Iraqi military recruiting center in Baghdad.

Last week, U.S. aircraft dropped pamphlets over Fallujah (search) urging residents to turn in al-Zarqawi, and American intelligence officials in Washington had said he was spending time in Fallujah.

U.S. officials have said al-Zarqawi's death would be a significant blow to the insurgency but would not end it.

Elsewhere, U.S. troops battled insurgents for a fourth day near the city of Baqouba, northeast of Baghdad, in fighting that has killed at least six Iraqis and one American soldier, the U.S. military and witnesses said. In southern Iraq, a roadside bomb killed at least two people, including a Portuguese security officer.

The attacks occurred less than two weeks before the transfer of sovereignty from the U.S.-run occupation authority to the new Iraqi government.

No official pageantry is being planned for the June 30 handover ceremony, where the U.S.-led occupiers, headed by L. Paul Bremer, officially cede power to Iraq's interim government. The ceremony will be a "very discreet event" that will not be attended by incoming U.S. Ambassador John Negroponte, a senior U.S. official told reporters on condition of anonymity.

"This is isn't going to be Hong Kong," the official said, referring to the massive festivities that marked the former British colony's return to China in 1997.

In Fallujah, rescuers pawed through pulverized homes, climbing over upended slabs of smashed concrete and twisted steel reinforcing bars.

Associated Press Television News footage showed water pooling into a yawning 20-foot bomb crater in front of one of the destroyed houses. One man displayed several copies of the Muslim holy book, the Quran, burned in the strikes.

"At 9:30 a.m., a U.S. plane shot two missiles on this residential area," Fallujah police chief Sabbar al-Janabi said as he surveyed the wreckage. "Scores were killed and injured. This picture speaks for itself."

Kimmitt refused to say whether the strikes were carried out by aircraft, cruise missiles or other means.

U.S. Marines besieged Fallujah in April after four American security contractors were killed in an ambush and their bodies mutilated.

Ten Marines and hundreds of Iraqis, many of them civilians, died before the siege was lifted, and security was handed over to an Iraqi volunteer force, the Fallujah Brigade.

The clashes in Buhriz, near the city of Baqouba, began Wednesday when insurgents fired on U.S. troops after they met with the mayor to discuss reconstruction projects, 1st Infantry Division spokesman Maj. Neal O'Brien said.

Clashes have continued intermittently since then in the Baqouba area, about 35 miles northeast of Baghdad. One American soldier died of wounds suffered Friday in Buhriz, O'Brien said.

The clashes spread Saturday to nearby Tahrir, where insurgents fired rocket-propelled grenades at a U.S. patrol, wounding two American soldiers, O'Brien said.

Dr. Nassir Jawad of the Baqouba General Hospital said at least six Iraqis were killed and 54 were wounded in the Buhriz fighting. Municipal officials had said 13 Iraqis died. U.S. officials put the Iraqi death toll at 10 in the Thursday fighting and five in Friday's.

In southern Iraq, a roadside bomb killed a Portuguese security official and an Iraqi policeman as they drove from the southern city of Basra to nearby Zubayr, police Capt. Diaa Hussein said.

The Portuguese Foreign Ministry confirmed the death of the Portuguese citizen, Antonio Jose Monteiro Abelha, 36, who worked with the Iraqi state-run Oil Products Co.

Insurgents have stepped up attacks against the vital oil industry. On Wednesday, gunmen killed the security chief of the state-run Northern Oil Company, Ghazi Talabani, in Kirkuk.

Insurgents also hit Iraq's strategic pipeline system, cutting off all exports from the southern oilfields in bombings this week. Iraq hopes to resume partial exports by next weekend.

Meanwhile, New York-based Human Rights Watch said it would be unlawful for the United States to hold detainees, including Saddam Hussein, after the June 30 power transfer without charging them with crimes.

The U.S. military has said it will continue to hold thousands of prisoners detained since invading Iraq last year and it could do so legally until a "cessation of hostilities."

"The Bush Administration can't have its cake and it too. If the occupation is over, so is the U.S. authority to detain Iraqis without criminal charges," said Kenneth Roth, executive director of Human Rights Watch.