The fighters set up fake check points following the killing of the 14 workers who were found on Friday in a nearby orchard with their throats slit and hands and legs bound.
The Shia labourers, who were from Balad, a town 80 km north of Baghdad, were found in nearby Dhuluiya, a mostly Sunni town where the two communities are separated by the Tigris River.
Qasim al-Qaisi, head of Balad hospital, said that some of the bodies, mostly Sunni Arab men, brought to the hospital in the last 24 hours were mutilated and bore signs of torture from what appeared to be reprisal attacks across Balad.
He told Reuters news agency: “We are preparing ourselves to receive more bodies as long as the situation can get worse. Sectarian killing is sweeping the area.”
The check points were still being manned on Sunday in Balad town, according to police reports. Gunmen were seen roving the town and residents said the town was tense.
Hamad al-Qaisi, governor of central Salaheddin province, travelled to Balad along with the province’s police chief to restore calm, officials said.
Meanwhile, three US soldiers were killed near Baghdad, the US military said, adding to a toll that, at the current pace, could make October the deadliest for US forces since January 2005.
More than 40 US troops have been killed in Iraq this month, a rise US commanders have attributed to a surge in violence during the holy month of Ramadan and more aggressive US operations in Baghdad against sectarian death squads.
At least five American soldiers died on Saturday, including the three killed south of Baghdad when their vehicle was struck by a roadside bomb.
Two-to-three soldiers on average die everyday in Iraq, most the victims of roadside bombs.
In other violence, four car bombs, three of them driven by suicide attackers, killed at least seven people and wounded 60 in the ethnically-mixed city of Kirkuk on Sunday, major general Toran Abdul-Rahman, Kirkuk’s deputy police chief, said.