An American missionary held hostage by Muslim extremists for 377 days has returned to the Philippines under tight security to testify against her abductors.

A terrorist bombing on the scale of the Madrid attacks was averted in the Philippines with the arrests of four Abu Sayyaf members and the confiscation of 380 pounds of TNT, the president said in Manila.

As the Philippines Government stepped up its battle with Muslim rebel hostage-takers today, the military said it found two bodies in guerrilla territory, but neither belonged to the American captive the insurgents claim to have beheaded.

Deadly street battles erupted in a southern Philippines town today as a self-styled ‘‘suicide squad’’ of Muslim extremists invaded a hospital and church, seizing patients, doctors and a priest.

A Muslim extremist group that snatched 20 people, including three Americans, from an island resort in the Philippines threatened today to kill all the hostages if the military moves attempt to rescue them.