BAGHDAD, Iraq – A bomb claimed by a Sunni Arab extremist group killed at least 37 Shiites in Baghdad on Saturday as they stocked up on fuel for Ramadan, just days after the U.S. military warned that sectarian bloodshed could worsen during the Islamic holy month.

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

Iraq’s armed forces said they struck a blow against groups affiliated with al-Qaida in Iraq, announcing the arrest of a senior leader of Ansar al-Sunnah, a radical Sunni group responsible for attacks on U.S. forces, kidnappings and beheadings.

Al-Qaida in Iraq, meanwhile, put a previously released video on the Internet showing what it said was the group’s new leader killing a Turkish hostage two years ago. The statement identifying the masked killer as Abu Ayyub al-Masri couldn’t be independently confirmed.

The tape’s release was seen as a possible signal by Al-Masri, who was named the group’s leader after a U.S. air raid killed Abu Musab al-Zarqawi in June and earlier this month called on Sunnis to step up attacks on American troops.

A U.S. soldier was killed by a roadside bomb in northern Baghdad, and two other American soldiers were killed and three injured when a bomb exploded near their patrol outside Hawija, 150 miles north of the capital, the U.S. command said.

A Danish soldier was also reported killed and eight wounded in a roadside bombing in southern Iraq. He was the fourth Danish soldier to die in Iraq since the U.S.-led invasion ousted Saddam Hussein’s regime more than three years ago.

The Sunni extremist group Jamaat Jund al-Sahaba – Soldiers of the Prophet’s Companions – claimed responsibility for the bomb attack on Shiites in Sadr City, a sprawling slum that is home to more than 2 million people and a stronghold of radical Shiite cleric Muqtada al-Sadr.

Police said the bomb went off as people crowded behind a kerosene truck to buy fuel for Ramadan, during which people gather just after sunset for a communal meal to break a daylong abstention from food and water.

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.”

Jamaat Jund al-Sahaba blamed al-Sadr’s Mahdi Army militia for the Friday attack that killed four people in the Hurryah neighborhood, where a Shiite militia last week openly threatened members of the Sunni minority.

“This operation comes in retaliation for the crimes perpetrated by the Mahdi Army against our Sunni people in Baghdad,” the group said, warning of more attacks. The authenticity of the statement could not be independently verified.

The killings came on the first day of Ramadan for Sunni Arabs. Shiites, along with the Shiite-led Iraqi government, were expected to declare Sunday as the first day of the holy month, a tangible sign of the differences separating the two Islamic sects.

Maj. Gen. William B. Caldwell, spokesman for the U.S.-led military coalition, warned earlier of the danger of Iraq’s already severe sectarian violence escalating during Ramadan.

In Kut, a city 100 miles southeast of Baghdad, eight apparent victims of sectarian death squads were turned in at the morgue. Their bodies had been dumped in the Tigris River.

One person was killed and six civilians injured in Saturday evening in a northern Baghdad district when a motorcycle rigged with a bomb exploded, police said.

Caldwell also said a spike in attacks by al-Qaida in Iraq could be coming after the threat issued Sept. 7 by al-Masri.

The video posted on a Web site often used by Islamic extremists was the first purported appearance of al-Masri since he was announced as the leader of al-Qaida in Iraq this summer.

In a statement accompanying the video, the group said the masked man shown shooting a blindfolded Turkish hostage three times in the head was al-Masri. The video was originally released Aug. 2, 2004, but none of the three militants on it were identified at the time.

Another al-Qaida-linked group posted a Web video purporting to show the bodies of two U.S. soldiers being dragged behind a truck in June, then set on fire in apparent retaliation for the alleged rape-slaying of an Iraqi woman by U.S. troops.

The Mujahedeen Shura Council, an umbrella organization of insurgent groups, including al-Qaida, posted another video in June showing the two soldiers’ mutilated bodies and claiming it killed them. It was not clear whether the video posted Saturday was a continuation of that footage.

Iraqi officials claimed a success against the al-Qaida-linked Ansar al-Sunnah group with the arrest of a top leader.

Muntasir Hamoud Ileiwi al-Jubouri and two aides were captured late Friday near Muqdadiyah, 56 miles northeast of Baghdad, 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 as well as the August 2004 execution of 12 Nepalese hostages and a December 2004 bombing that killed 22 people at a U.S. military mess hall in the northern city of Mosul.

Insurgent violence continued. In the northern city of Beiji, gunmen threw the decapitated heads of 10 Iraqi army soldiers into a popular open-air market, police said.

—

Associated Press writers Patrick Quinn, David Rising, Sameer N. Yacoub and Qais al-Bashir contributed to this report.

AP-ES-09-23-06 1717EDT