Turkey's government and military leaders are meeting in Ankara under President Abdullah Gul today to discuss a response to the Kurdish rebel attack that left 17 soldiers dead.
Prime Minister Tayyip Erdogan said they would make a decision at the end of the talks on the next steps.
The meeting will be attended by Chief of General Staff General Yasar Buyukanit, several cabinet ministers and ranking military commanders.
17 soldiers were killed by Kurdish rebels in an ambush in the mountains near the Iraqi border this morning.
They were the first Turkish casualties since parliament authorised troops to conduct cross-border incursions into northern Iraq to hunt down rebels who use the mainly Kurdish region as a base.
Fighting has continued in Hakkari province in the mountainous border area, according to the security sources.
In Arbil, Iraq, a Kurdish military official said the Turkish military fired artillery shells into about 11 areas along the border in Iraq today. There were no casualties.
Turkey has deployed as many as 100,000 troops along the border to try to stop rebels of the outlawed Kurdistan Workers Party (PKK) crossing from Iraqi bases to stage attacks inside Turkey.
The US, Turkey's NATO ally, and Baghdad have urged Ankara to refrain from military action, fearing it could destabilise the most peaceful part of Iraq and possibly the wider region.
But Prime Minister Tayyip Erdogan's government is under pressure from the public and the powerful military to take action against the PKK.
He has said Baghdad must close down the PKK camps in northern Iraq and hand over rebel leaders.
More than 30 Turkish troops and security personnel have been killed in rebel attacks in the past month.
Ankara blames the PKK for the deaths of more than 30,000 people since the group launched its armed campaign for an ethnic homeland in southeast Turkey in 1984.