BAGHDAD, Iraq - U.S. and Iraqi forces raided suspected insurgent hideouts in the heart of the capital today, sparking clashes along a main Baghdad thoroughfare. But the release of two Italian women and five other hostages encouraged relatives of foreigners still being held.

Iraqi security forces backed by U.S. troops arrested a suspected terrorist operating on Baghdad's bloodied Haifa Street, cornering him today in a closet as he tried to conceal his face with his wife's underwear, an Iraqi National Guard commander said.

Kadhim al-Dafan is believed to be a key neighborhood leader, responsible for car bombs and other attacks in the area, said Col. Mohammed Abdullah. Five other suspected insurgents were also taken into custody as U.S. and Iraqi forces clashed with rebels on the street.

During the operation, an Associated Press photographer saw about a dozen people rounded up behind a razor wire barrier with their hands tied. It was not known whether they included the six people Abdullah said had been arrested.

The commander said his troops also uncovered large caches of weapons, ammunition and explosives secreted between graves of the nearby Sheikh Omar cemetery.

Haifa Street, a rebel enclave, has been the scene of repeated bombings, firefights and raids in recent weeks. U.S. officials also believe the area is being used to fire mortars at the Green Zone, a heavily fortified area that is home to the U.S. Embassy and government offices.

In a rare bit of good news, the two female Italian aid workers were released Tuesday and returned home just hours later.

The Italians, Simona Torretta and Simona Pari, were wearing full black veils that revealed only their eyes as they were received by the Italian Red Cross in a Baghdad neighborhood.

Three Egyptian telecommunications workers abducted last week were also among those freed Tuesday, their parent company, Orascom, announced in Cairo. A fourth Egyptian in the group was freed Monday and two others remain hostage.

The freed Egyptians said their captors treated them well.

Late Tuesday, a car bomb exploded in the northern city of Mosul as a U.S. military convoy was passing by, wounding six American soldiers, the military said. Witnesses said the attack wrecked a vehicle and that American troops sealed off the area.

Capt. Angela Bowman of the Army's Task Force Olympia said today that five of the wounded soldiers have since returned to duty.

A U.S. warplane struck a rocket launcher mounted on the back of a vehicle in the Baghad slum of Sadr city overnight, destroying the vehicle but igniting several secondary explosions, the U.S. military said.

"The vehicle was fired on and destroyed in an open area away from buildings and other people," said Capt. Brian O'Malley of the Army's 1st Brigade Combat Team.

Maithem Mahmoud of the al-Sadr General Hospital said one man was killed and a woman injured in the strike.