A U.S. coalition official says an American soldier who was taken hostage by Iraqis appears to be in good health. Two Japanese hostages were released Saturday. In Fallujah, local leaders and U.S. officials are meeting for their second day of direct discussions to end two weeks of violence in the town.

U.S. authorities have reviewed video footage of 20-year-old private Keith Matthew Maupin, who has been missing since last Friday, and concluded that he did not appear to have been abused or tortured. The videotape showed the army private surrounded by several armed and masked men, who demanded the release of Iraqi prisoners held by the coalition.

Iraqi insurgents released two Japanese hostages Saturday, but many foreign hostages continue to be held.

Meanwhile, a U.S. diplomat joined a team of Iraqi negotiators for a second day of talks in the Sunni Arab stronghold of Fallujah.

Coalition spokesman Dan Senor said he is optimistic about the talks between local leaders and an Iraqi and American delegation, but he added that time is running out.

"Based on what Fallujan leaders are saying we are hopeful," he said. "We are hopeful about their intentions, but our overriding question is, can they deliver? And if so, can they do so expeditiously?"

Elsewhere in Iraq, tensions continued to rise in the Shiite holy city of Najaf, where coalition forces are demanding that the militia of the radical Shiite cleric Moqtada al-Sadr give up their arms. A spokesman for the cleric, who is wanted on charges of murder, told reporters that U.S. officials have put obstacles in the way of negotiations.

Mr. Senor said the coalition has made its demands clear.

"We want the rule of law to prevail in Iraq," said Dan Senor. "There is no room for illegal militias and mob violence. And there is no room for individuals or organizations to just single-handedly, unilaterally decide to take over government buildings and properties."

Mr. Senor added there have been no direct talks with Moqtada al-Sadr or his militia.