More than a dozen insurgents ambushed and killed seven Spanish intelligence officers on Saturday on a highway near this town south of Baghdad, according to witnesses and Spanish officials.

The closely coordinated attack, in which gunmen fired from moving cars and behind a concrete wall, was the latest in a series against European troops taking part in the U.S.-led occupation. Witnesses said the ambush was carried out by loyalists of former president Saddam Hussein using automatic rifles and rocket-propelled grenades.

In a separate attack north of Baghdad, two Japanese diplomats were killed in an ambush near Hussein's home town of Tikrit, according to the Japanese Foreign Ministry. The Japanese government is weighing whether to dispatch noncombat troops to help rebuild Iraq, a contribution desperately being sought by the U.S. government but opposed by many Japanese.

An hour after the attack on the Spaniards, more than 100 residents of a nearby Sunni Muslim village swarmed the area, many chanting slogans in support of Hussein. In a display of jubilation mixed with hostility unusual even by the standards of other attacks on foreign soldiers, several youths forcefully kicked three of the bodies, which had been dragged into the opposite lane of the divided road.

People at the site said they believed that the soldiers, who were dressed in civilian clothes, were CIA agents or members of the Israeli intelligence service.

"Praise to the steadfast people!" several people shouted in unison. Others beckoned passing motorists to roll down their windows and then boasted: "Look what we have done to the Americans and the Zionists." It was the deadliest roadside attack on occupation forces since shortly after the capture of Baghdad.

Earlier Saturday, the top U.S. military commander in Iraq said that the number of attacks against American forces had fallen sharply in recent weeks but that November was nonetheless the deadliest month for U.S. troops since the war began in March.

Lt. Gen. Ricardo Sanchez said Iraqi insurgents were finding it increasingly difficult to strike U.S. and allied forces because the U.S. military had stepped up offensive operations against the resistance. In the past two weeks, he said, the number of attacks on U.S. and allied forces declined more than 30 percent to an average of 22 "engagements" a day. This did not translate into a lower death rate among U.S. servicemen, he said, because several attacks against them were especially bloody.

Witnesses interviewed about an hour after the Spaniards came under fire said the men were traveling in two sport-utility vehicles about 25 miles south of Baghdad when two cars filled with gunmen pulled alongside and began firing, forcing the lead Spanish vehicle off the road and into a muddy field.

The Spanish vehicles then came under fire from a band of attackers who had been waiting behind a concrete wall along the road, the witnesses said.

Although both vehicles were hit by rocket-propelled grenades and large numbers of bullets, some of the Spaniards returned fire and a gun battle ensued for more than 20 minutes, witnesses said.

"There was shooting everywhere," said Omar Hassan, 22, a student who claimed to have witnessed the attack and later joined the throng of celebrants. The Spaniards, he said, "were resisting a lot."

A fire sparked by a rocket-propelled grenade consumed the first car, witnesses said. An hour after the attack, it appeared that its occupants either had been killed by the time the fire began or were trapped inside. Two badly burned bodies, which witnesses said were from that vehicle, had been dragged out of the rear seats and placed in the median. Two other bodies remained in the front seats of the still-burning car.

The occupants of the second vehicle exited before their vehicle went up in flames and unsuccessfully sought to fend off the assailants while crouching on the road, witnesses said. One of them managed to run away and was rescued by a passing motorist, witnesses said, but the other three were killed, and after the attack their bodies were lying in the northbound lane of the highway more than 20 yards from their vehicle.

Hassan said some of the attackers fired a final volley of shots at the bodies on the roadway. "They said, 'By the name of Saddam, we kill you,' " he recounted.

Nearby, Ali Sarhan, 18, jumped up and clapped as cars drove by. "This will be a lesson for everybody in Iraq," he said. "If they are not going to leave our country, we will get rid of them one by one."

Spain's defense minister, Frederico Trillo, said in a televised address that the soldiers, from the country's National Intelligence Center, had eaten lunch in Baghdad and were "on their way to carry out reconnaissance in the area." Four of the soldiers were due to return to Spain shortly, he said.

Latifiya is just north of a large swath of central and southern Iraq that is the jurisdiction of a Polish-led multinational force. Spain has about 1,300 troops in that force.

Lt. Gen. Sanchez said Saturday that at the same time that attacks on Americans have fallen, the insurgents have dramatically escalated their strikes against Iraqis cooperating with the U.S. occupation, carrying out 156 attacks against Iraqi security forces, civilians and officials during the last month.

Speaking at a news conference in Baghdad, Sanchez said that some members of the newly constituted Iraqi police force have been participating in attacks on U.S. and allied soldiers.

He said that Iraqi security forces are playing an important role in helping U.S. soldiers to uproot insurgents, but added that at a time when large numbers of Iraqi police are being taken on in sensitive roles, he remains concerned about the potential for them to turn against their American backers. "Clearly there is always a concern when you're in this type of environment. We're trying to do the vetting as close as we can," Sanchez said.

At the site of the attack in Latifiya, not every passing motorist joined in the horn-honking and waving. The driver of a white Toyota sedan rolled down his window and castigated Ali Sarhan and his friends.

"You enjoy what you're doing?" the driver growled. "You're killers."

"We're not killers," replied Sarhan, a student. "We're defending our country."

"By killing innocent civilians?" the driver shot back.

"They're not civilians," Sarhan responded. "They're Zionists."

The driver shot a look of disgust at Sarhan. "You're not going to get rid of them by doing nasty things like this," he said. Then he drove away.

Correspondent Alan Sipress in Baghdad and special correspondent Naseer Nouri in Latifiya contributed to this report.

Iraqis celebrate over the bodies of Spanish intelligence officers killed in an attack that witnesses said was carried out by Hussein loyalists.