...This attack fits into my theory that these guys are making a significant mistake that appears to be provoked by losing their base of operations in Falljah. While the media has not recognized it yet loading up a bus of attackers is not sound strategy. It is desperation.
US and Iraqi forces have traded gunfire with rebels across Baquba, 65km (40 miles) north-east of the Iraqi capital.
The clashes began at about 0800 (0500 GMT) when a bus carrying about 20-40 insurgents arrived in the town, a US sergeant told AFP news agency.
The rebels used rocket-propelled grenades and small arms fire near a traffic circle and police station in the town.
The insurgents were killed in gun battles and the air strikes. Four US soldiers were wounded.
In one skirmish, "1st Infantry Division soldiers received fire from a mosque," a US military statement said.
Iraqi police stormed the mosque and found a weapons cache including rocket-propelled grenades, mortars and ammunition, the statement said.
Earlier, insurgents killed an Iraqi policeman as they took control of a police station in Buhriz, near Baquba.