FALLUJAH, Iraq -- Hundreds of reinforcements joined fellow Marines besieging Fallujah on Saturday, and the U.S. military said it would move to take the city if cease-fire talks fail. Fighting raged through the center of the country, killing 40 Iraqis and an American airman.

Militants threatened to kill and mutilate an American civilian they captured Friday if U.S. troops in Fallujah don't withdraw.

Gunfire crackled in the city, even as Iraqi government negotiators met with Fallujah leaders to persuade them to hand over militants who killed and mutilated four Americans in here March 31. Insurgents offered to call a truce if U.S. troops leave Fallujah -- a condition the Americans appeared unlikely to accept.

Nearly 60,000 Fallujah residents, about a third of the population, have fled over the past two days, a Marine commander said.

Elsewhere, militants hit a U.S. air base with mortars in Balad, north of Baghdad, killing an airman. Other fighters attacked government buildings and police stations in Baqouba, setting off firefights in which about 40 Iraqis were killed. Several U.S. troops were wounded, said Capt. Issam Bornales, spokesman for the 1st Infantry Division's 3rd Brigade.

Insurgents also fought U.S. troops in Baghdad's northern, mainly Sunni neighborhood of al-Azamiyah.

Masked gunmen caused havoc on the road between Baghdad and Fallujah, a key supply route, rocketing a second fuel convoy in the area in as many days. Nearby, guerrillas hit a U.S. tank with an rocket-propelled grenade, setting it ablaze.

American hostage

Militants threatened to kill American hostage Thomas Hamill, 43, of Macon, Miss., whose capture Friday during another convoy ambush in area was the latest in a series of kidnappings in Iraq.

"Our only demand is to remove the siege from the city of mosques," a spokesman said in a videotape given to the Al-Jazeera television network that shows footage of Hamill.

"If you don't respond within 12 hours ... he will be treated worse than those who were killed and burned in Fallujah" -- referring to the Americans whose bodies were mutilated and two of them hanged from a Euphrates River bridge. They said the 12-hour period started at 6 p.m. local time, or 9 a.m. CDT.

The tape shows Hamill giving his name, age and home state, and standing silently in front of an Iraqi flag emblazoned with the slogan "God is great." In a voice-over, a TV announcer quotes him as saying his captors were not mistreating him.

"I am in good shape" the voice-over said. " ... I want my family to know that these people are taking care of me, and provide me with food, water and a place to sleep."

His wife, Kellie, told The Associated Press her husband works for the Houston-based engineering and contracting firm Kellogg, Brown & Root, a subsidiary of Halliburton, but referred all other comment to the employer.

Two U.S. servicemembers and several contract employees were still unaccounted for from attacks Friday, said a Pentagon spokesman, Lt. Commander Dan Hetlage.

Militants also continued to hold hostage two aid workers -- a Canadian and an Arab from Jerusalem -- but announced they would free three Japanese civilians. In an TV interview with the Japanese network Asahi, Shinzo Abe, the No. 2 official in Japan's ruling party, said the release was expected before about noon Sunday Japan time, or 10 p.m. Saturday CDT.

The kidnappers of the Japanese, identifying themselves as the "Muhahedeen Squadron," said they made the decision after mediation by the Islamic Clerics Committee, a Sunni organization, Al-Jazeera reported. They urged the Japanese public to press their government to withdraw its troops from Iraq, the station said.

Brig. Gen. Mark Kimmitt called on Fallujah's insurgents to join a bilateral cease-fire. But he said a third battalion of Marines had moved to the city, joining two battalions totaling 1,200 troops and a battalion of nearly 900 Iraqi security forces.

Kimmitt warned that if talks between city leaders and members of the Iraqi Governing Council failed, the military would consider renewing its assault on Fallujah. Marine commanders were skeptical negotiations would succeed.

"The prospect of some city father walking in and making 'Joe Jihadi' give himself up are pretty slim," said Lt. Col. Brennan Byrne, commander of the 1st Batallion, 5th Marine Regiment.

"What is coming is the destruction of anti-coalition forces in Fallujah ... they have two choices: Submit or die," he told reporters.

During talks, insurgents offered through representatives to call a cease-fire starting Sunday morning if U.S. troops withdraw outside city limits, said council member Mahmoud Othman. There was no immediate reaction from the U.S. military, and it was unclear if talks had ended for the night.

Earlier, Kimmitt said Marines were respecting a unilateral halt in offensive operations called Friday but said gunmen continued to fire on troops, who were responding.

"Were we not at this point observing suspension of offensive operations ... it could well have been that we would have had the entire the city by this point," Kimmitt told reporters in Baghdad.

Asked what he hoped from the negotiations -- in which U.S. officials were not taking part -- Kimmitt said: "We would like to hear that they will lay down their arms ... (and) are prepared to turn over the perpetrators of the attacks on the Americans."

He said 60 insurgents had been captured in the Fallujah campaign so far, including five foreign Arabs.

In the north, the head of the Iraqi Red Crescent's Irbil office, Barzan Umer Mantik, and his wife were killed Saturday in their car in the nearby city of Mosul, the International Committee of the Red Cross said.

Also, the German Foreign Ministry said two security agents from its embassy in Baghdad have been missing for several days. It gave no details, but German TV stations reported that the missing were ambushed Wednesday on a routine trip from Amman, Jordan, to Baghdad. Station ARD said the two were agents with GSG-9, a counterterrorism unit trained in freeing hostages and other commando missions.

In the south, the militia of radical Shiite cleric Muqtada al-Sadr remained in control of Karbala and nearby Najaf and Kufa. Braced for an American assault, hundreds of militiamen with assault rifles roamed the streets of Najaf and Kufa and guarded makeshift checkpoints.

In anticipation of violence and because of a major religious occasion this weekend, most stores in Najaf and Kufa were closed. Some owners emptied shops of goods, storing them at home for fear of looting.

Hundreds of thousands of pilgrims are in Karbala and other Shiite cities to mark al-Arbaeen, the end of the mourning period for a 7th-century martyred Shiite saint. Ceremonies last until Sunday night.

U.S. forces continued to fight gunmen in Kut, where hundreds of troops moved in Friday to wrest the city from the control of al-Sadr's militia. An AC-130 gunship and helicopters blasted militia positions as the Americans seized police stations and government buildings, Kimmitt said.

Kimmitt said seven militiamen were killed and 74 captured. Hospital officials in Kut said 23 Iraqis have been killed in clashes between al-Sadr supporters and U.S. forces since the incursion began.

The U.S. military's death toll from the week of fighting across the country stood at 47. The fighting has killed more than 500 Iraqis -- including more than 280 in Fallujah, a hospital official said. At least 649 U.S. soldiers have died in Iraq since the war began in March 2003.