It is thought there are up to 260 mass graves in Iraq
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Iraqi police say they have uncovered up to 60 bodies in a mass grave outside the southern Iraqi city of Basra.
The bodies are thought to be those of Shia Muslims killed after an uprising in 1991 was brutally crushed by Saddam Hussein's regime.
Bundles of decomposing clothes and bones were found, along with wire used to bind victims' hands, police said.
US officials say Iraq may have up to 260 mass graves containing as many as 300,000 bodies.
US deaths
The finding comes as a roadside bomb blast left two US soldiers and an Iraqi interpreter dead in Baghdad - the latest in a spate of such attacks.
US patrols in Iraq still suffer almost daily attacks
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The blast struck a US military convoy at about 1145 (0845 GMT) on Monday, the US military said.
Two more US soldiers from the First Armoured Division were wounded.
Several hundred suspected insurgents have been arrested by US-led forces following the capture of the ousted Iraqi leader, Saddam Hussein, a week ago.
Chief US administrator in Iraq, Paul Bremer, said on Monday that intelligence obtained from the capture of the former Iraqi president had aided US attempts to combat the insurgency.
"We're getting some very useful opportunities in the last week or 10 days now to try to wrap up these leaders of the groups that are attacking our soldiers over there," he told NBC news.
The deaths bring the number of US troops who have died in Iraq since major operations were declared over in May to more than 200.
US military officials had earlier reported the detention of a former Iraqi general who, the Americans allege, had been co-ordinating the recruitment of guerrillas responsible for attacks on American troops.
They named him as General Mumtaz al-Taji, whom they said had worked in the military intelligence service under Saddam Hussein. The general was targeted during a raid on the town of Baquba, north of Baghdad.
Grim discoveries
Police digging at the scene of the mass grave in Basra say they have found bundles of shirts with wires hanging off the ends of the sleeves that were possibly used as handcuffs.
Human teeth and small bones, including parts of a skull, have also been uncovered, along with coins from just after the first Gulf War in late 1991.
In November US officials in charge of coalition attempts to uncover Iraq's mass graves said that 40 such sites had already been found.
The mass graves mostly contain the remains of ethnic Kurds and Shia Muslims killed for opposing the regime between 1983 and 1991, they said.
In May a mass grave containing at least 120 bodies was found in Basra.