Col. John Dorrian, a USA military spokesman, said the coalition had "definitively determined" that it did not conduct the airstrike that killed civilians in Daquq, and had shared its findings with the Iraqi government, which is carrying out its own investigation. The Iraqi prime minister, however, rejected any Turkish participation in the campaign.
U.S. Defense Secretary Ash Carter has visited both countries in recent days, and arrived in the Kurdish regional capital Irbil on Sunday, where he was expected to discuss the issue with Kurdish leader Masoud Barzani.
Journalists have not been allowed into the area near Bashiqa to confirm. With patriotic music blaring from loudspeakers on their Humvees, they then pushed into the village of Tob Zawa, about 9 kilometers (5 ½ miles) from Mosul, amid heavy clashes.
The top U.S. commander in Iraq, Army Lieutenant General Stephen Townsend, said his own information, while limited, "suggests (Barzani) was right, that there has been a considerable success at Bashiqa".
But he cautioned: "I have not received a report that says every house has been cleared, every [Islamic State fighter] has been killed and every IED [roadside bomb] has been removed".
Turkey has insisted that its forces can not remain idle during the fight to drive IS militants from Mosul.
Earlier this week, Iraqi special units also captured Bartella, a Christian village north of Qaraqosh.
Turkish Prime Minister Binali Yildirim said in televised comments: "The Peshmerga have mobilised to cleanse the Bashiqa region from [Islamic State]".
They said troops at the base were wearing protective masks because of the breathing concerns, and estimated it could take two to three days to put the fire out.
Bashiqa is close to a military base of the same name where some 500 Turkish troops are training Sunni and Kurdish fighters for the Mosul offensive.
In western Iraq, IS militants stormed into the town of Rutba, unleashing three suicide vehicle bombs that were blown up before hitting their targets, according to the spokesman for the Joint Military Command, Brig.
Elsewhere in Iraq, a burning sulfur plant south of Mosul that was torched by the Islamic State group is releasing large amounts of noxious gas into the atmosphere, draping towns in the area in toxic smoke.
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The Shiite-led government in Baghdad says the Turks are there without permission and has ordered them out. The terrorist group has moreover mounted several counter-attacks on a wider scale than generally reported.
On Friday, IS launched an attack on the city of Kirkuk, south-east of Mosul.
At least 46 people, majority in the security forces, were also killed in the raid and ensuing clashes, which had nearly completely ceased by late Sunday. There, despite Kurdish advances, part of the city remains in ISIS hands.
The Iraqi army says that they have regained control of the town after repelling the fighters, and that IS failed to gain access to government buildings.
"They fight extremely well".
Mr Carter said Washington would supply extra support to the Iraqis if it was requested and said the United States was planning a simultaneous operation in IS's Syrian stronghold Raqqa, according to the Associated Press news agency.
Carter said he wants to see military operations to isolate IS fighters in Raqqa, Syria, to begin "as soon as possible".
The offensive that started a week ago to capture Mosul is backed by an American-led coalition.
Those gains came after Iraqi and Kurdish forces launched an offensive against the nearby town of Bashiqa.
On Friday a sulphur factory outside of Mosul was set on fire by militants.
In Baghdad, meanwhile, a series of small bombings killed 11 people and wounded another 35, according to police and hospital officials, who spoke on condition of anonymity because they were not authorized to release the information.
Aid agencies are bracing for a displacement of up to one million civilians as the battle continues.