The MC-130H, a special operations variant of the C-130 Hercules, was struck on Wednesday "while conducting low-level training in a mountainous area of northern Luzon island," he said.

The aircraft returned to the Philippines' Clark Air Base where maintenance personnel found two bullet holes. One of the rounds pierced the aircraft's floor near a U.S. crew member, Davis said.

On Thursday, the United States and the Philippines launched exercises and training aimed at eliminating the "scourge" of the extremist group known as Abu Sayyaf, the acting U.S. ambassador, Robert Fitts, told soldiers in Zamboanga City.

Further north in Mount Pinatubo, 50 miles (90 km) northwest of Manila, Philippine troops recovered the body of an American man believed killed by communist guerrillas late on Wednesday.

Army Col. Jose Mabanta told Reuters the dead American and his wounded German companion, who was rescued, may have been ambushed in protest at the joint U.S.-Philippine military exercises.

"Our suspects are members of the NPA," Mabanta said, referring to the communist New Peoples' Army. The NPA has warned American soldiers they could face kidnapping.

U.S. and Philippine officials have linked the Abu Sayyaf guerrillas to bin Laden's al Qaeda network, chief suspects in the Sept. 11 attacks on the United States. The exercises, planned to last for at least six months, will involve about 3,800 Filipinos and some 600 Americans.

About 160 U.S. Special Forces troops will join Filipinos in training patrols in the jungles of mountainous Basilan island, some 560 miles south of Manila, where the Abu Sayyaf has been holding a U.S. missionary couple and a Filipina nurse hostage for more than eight months.

The group has previously killed hostages and released others in return for ransom.