BAGHDAD, Iraq — U.S. and Iraqi troops trying to stem the flow of insurgent fighters from Syria launched a dawn assault today on a border town, killing 37 militants.

Police in Baghdad said a car bomb detonated near one of their patrols outside a gate leading into the fortified Green Zone, killing two South Africans.

Operation Steel Curtain entered a new phase when U.S. and Iraqi forces moved into the Euphrates River valley town of Obeidi, about 185 miles west of Baghdad.

"Five targets were struck by coalition airstrikes resulting in an estimated 37 insurgents killed. The insurgents were engaging coalition forces with small arms fire at the time of the strikes," the statement said. "Preliminary reports indicate an estimated 25 insurgents have already been captured and are currently detained."

The troops assigned to the 2nd Marine Division have already fought their way through two neighboring towns, Husaybah and Karabilah. U.S. forces believe the border towns have been an entry point for insurgent fighters and weapons into Iraq.

The Baghdad blast killed two South Africans and wounded three others working for a State Department security contractor DynCorp International, U.S. Embassy spokeswoman Elizabeth Colton said. The blast was followed by small arms fire and billowing black smoke that could be seen across the city.

The blast apparently targeted a convoy leaving the Green Zone, the headquarters of the Iraqi government and U.S. forces in Iraq.

The blast occurred near the Iranian Embassy, about 100 yards north of the Green Zone gate, which is surrounded with blast walls. Two Apache attack helicopters were soon flying over the scene as the smoke cleared and sporadic gunfire continued in the area.

In the western town of Ramadi, a Sunni stronghold, a roadside bomb detonated shortly after a U.S. patrol passed, destroying two buses and killing five civilians and wounding 20 others, police Capt. Nassir Al-Alousi said.

The U.S. command said Sunday that two Marines were killed the day before by a bomb west of Baghdad and an American soldier died in a vehicle accident in western Iraq.