Baghdad ? The U.S. military on Sunday announced the arrest of a suspect in the killing of a sheik who spearheaded the U.S.-backed Sunni revolt against al-Qaida in Iraq, even as the terror network launched a campaign of violence during the Islamic holy month of Ramadan.

In Baghdad, meanwhile, Iraqi police said security contractors opened fire in a predominantly Sunni neighborhood of western Baghdad, killing at least nine civilians. The U.S. Embassy said contractors working for the State Department were involved in an incident but provided no further details because an investigation was under way.

North of the capital, dozens of suspected Sunni insurgents raided Shiite villages, killing at least 15 people and setting homes ablaze, police said. A bicycle bomb exploded at a cafe serving tea and food during the Ramadan fast in northern Iraq.

The surge of bloodshed – with 54 people killed or found dead nationwide Sunday – occurred a day after al-Qaida announced a new campaign aimed at countering U.S. and Iraqi claims the terror movement is reeling following the U.S.-led offensives around the Iraqi capital.

But the U.S. military insisted it had the group on the run and said a man believed responsible for the assassination of a U.S.-allied Sunni tribal leader in Anbar province had been arrested north of Baghdad.

Abdul-Sattar Abu Risha, 37, was the leader of Anbar Awakening – an alliance of clans backing the Iraqi government and U.S. forces against al-Qaida in Iraq that was touted as one of the success stories of the war. He and three companions were killed in a bombing Thursday outside his heavily guarded compound in the provincial capital of Ramadi, days after he had met with President Bush.

The U.S. military said an al-Qaida-linked militant connected to his death and a plot to kill other tribal leaders – Fallah Khalifa Hiyas Fayyas al-Jumayli, an Iraqi also known as Abu Khamis – was seized Saturday during a raid west of Balad, and the search continued for other suspects.

Brig. Gen. Joe Anderson, chief of staff to the No. 2 commander in Iraq, said al-Qaida fighters were “off-balance” and had “clearly been neutralized” in Baghdad.

“They are very fractured. It’s very localized and the ability for them to conduct large-scale, sensational attacks has been greatly decreased,” Anderson said at a news conference.

The security contractors involved in the shootings in the Mansour neighborhood of Baghdad were in a convoy of six SUVs and left the scene after the incident. The police officer who reported the shootings spoke on condition of anonymity because he was not authorized to release the information.

A witness said the gunfire broke out following an explosion.

“We saw a convoy of SUVs passing in the street nearby. One minute later, we heard the sound of bomb explosion followed by gunfire that lasted for 20 minutes between gunmen and the convoy people who were foreigners and dressed civilian clothes. Everybody in the street started to flee immediately,” said Hussein Abdul-Abbas, who owns a mobile phone store in the area.

Iraqi state television said Prime Minister Nouri al-Maliki condemned the shooting by a “foreign security company.”

There are tens of thousands of private security contractors in Iraq, including many Americans and Britons.