Turkish leaders responded angrily, considering a cross-border offensive despite opposition from the United States, Iraq and the European Union.
Turkey's military, civilian and intelligence leaders gathered for a new emergency meeting on Sunday day evening - just four days after Parliament authorized the government to deploy troops across the border - to decide whether to push into mountainous northern Iraq and try to inflict a blow on the increasingly aggressive Kurdish rebels.
Turkey's Defense Minister Vecdi Gonul told reporters after a meeting with U.S. Defense Secretary Robert Gates in Ukraine on Sunday that government officials were meeting Sunday to consider their options. "They are planning to cross border" - but "not urgently," he said.
In Washington, the White House condemned the attacks and expressed condolences to the people of Turkey.
"These attacks are unacceptable and must stop now," said Gordon Johndroe, President Bush's national security spokesman. "Attacks from Iraqi territory need to be dealt with swiftly by the Iraqi government and Kurdish regional authorities."
"The United States, Turkey and Iraq will continue to stand together to defeat the PKK terrorists," Johndroe added.
Turkish military confirmed that tactical units were chasing the rebels and pounding 63 suspected positions. Deputy Prime Minister Cemil Cicek would not say however, whether some of those positions were on Iraqi soil.
"Whatever is necessary in this struggle is being done and will be done," Cicek said.
The troops, backed by helicopter gunships, killed 32 rebels so far in ongoing action that also left 16 soldiers wounded, Cicek said.
The rebel group, Kurdistan Workers Party or PKK, claimed later that its guerrillas had also captured a "number" of Turkish soldiers. Eight soldiers were missing according to private NTV television but there was no official confirmation of the capture and Cicek refused comment.
"It is not possible to make an overall statement since the clashes are still under way," Cicek said.
"Every kind of attack will be avenged many times over," Cicek said.
The soldiers died when an estimated 200 guerrillas - the largest single group to attack a Turkish unit in years - reportedly launched a three-pronged attack on an infantry company near the village of Daglica, less than five kilometers (three miles) from the Iraqi border.
The attack occurred just after midnight during a military offensive against rebels in Hakkari province, where the borders of Turkey, Iraq and Iran meet. Hakkari is east of Sirnak province, another area of conflict between the PKK and the Turkish military.
According to CNN-Turk, the rebels blew up a bridge as a 12-vehicle military convoy was crossing it. In a separate attack on Sunday, 17 people were injured when a bomb exploded as a minibus - part of a wedding convoy - passed near the area where the soldiers were killed, the local governor's office said.
Iraq reported Turkish shelling toward Kurdish villages in the border area in northern Iraq. But no casualties were reported.
"Our anger, our hatred is great," said Prime Minister Recep Tayyip Erdogan.
Sunday's attack raised the death toll of soldiers in PKK attacks in the past two weeks to around 30 and increased calls by opposition leaders and ordinary Turks for an incursion.
"A cross-border offensive must certainly be carried out and their blood should not be left on the ground," Devlet Bahceli, leader of the Nationalist Action Party said.
Previous offensives by Turkey in Iraq have blunted rebel strength but failed to eradicate the group.
Hours after the attack, Iraq's president, Jalal Talabani - himself a Kurd - ordered the guerrillas to lay down their arms or leave Iraq.
"If they insist on the continuation of fighting, they should leave Kurdistan, Iraq and not create problems here. And they should return to their countries and do there whatever they want," Talabani said.
But Turkey said it was time for action against the PKK.
"Statements do not satisfy us. There has been nothing left to say; we are expecting concrete steps from them," Cicek said.
The attacks came as Turks voted Sunday in favor of electing future presidents by popular rather than parliamentary vote in a referendum. Turkey's leaders cut short trips to their hometowns where they cast their votes to return to the capital, Ankara.
Turkey's Foreign Minister Ali Babacan, meanwhile, arrived unexpectedly in Jiddah, Saudi Arabia - his third visit to an Arab country since parliament passed the motion - apparently in an effort to muster Arab support for any Turkish offensive.
Clashes were under way south of where the soldiers were ambushed, the military statement said. There were no reports that troops had crossed into Iraq.
Abdul-Rahman al-Chadarchi, a PKK spokesman in northern Iraq, denied there were any rebel casualties but said the rebels "killed and injured a number of Turkish soldiers and captured another number."
Journalists heading to the area were turned away at a military checkpoint. Much of the rural area along the border has already been declared off-limits by the Turkish military.
About 15 Turkish shells hit Iraqi territory starting at about 7 a.m. Sunday, said Col. Hussein Rashid of the Iraqi border guard forces. The bombardment was concentrated in the Mateen mountain range in the Amadiyah area, 20 miles from the border.
Rashid said the villages were deserted because of the border tension.
The Iraqi region of Amadiyah is roughly opposite the Turkish town of Cukurca, in Hakkari province. Rebels are active near Cukurca, about 30 miles from the location where the soldiers died Sunday.
Turkey has been pressing the U.S. and Iraq to crack down on rebels who have found safe havens in the mountainous areas of northern Iraq. The United States opposes unilateral action by Turkey, fearing it could destabilize the most stable part of Iraq.
The U.S. lists the PKK as a terrorist organization and has condemned its attacks in Turkey. However, Washington has called on the Turkish government to work with the Iraqis.
Rebels periodically cross the border to stage attacks in their war for autonomy for Turkey's predominantly Kurdish southeast. More than 30,000 people have died in the conflict that began in 1984.
Associated Press Writers Volkan Sarisakal, Suzan Fraser and Selcan Hacaoglu in Ankara contributed to this report.