On urban arterials, travel time estimation is challenging especially from various data sources. Typically, fusing loop detector data and probe vehicle data to estimate travel time is a troublesome issue while considering the data issue of uncertain, imprecise and even conflicting. In this paper, we propose an improved data fusing methodology for link travel time estimation. Link travel times are simultaneously pre-estimated using loop detector data and probe vehicle data, based on which Bayesian fusion is then applied to fuse the estimated travel times. Next, Iterative Bayesian estimation is proposed to improve Bayesian fusion by incorporating two strategies: 1) substitution strategy which replaces the lower accurate travel time estimation from one sensor with the current fused travel time; and 2) specially-designed conditions for convergence which restrict the estimated travel time in a reasonable range. The estimation results show that, the proposed method outperforms probe vehicle data based method, loop detector based method and single Bayesian fusion, and the mean absolute percentage error is reduced to 4.8%. Additionally, iterative Bayesian estimation performs better for lighter traffic flows when the variability of travel time is practically higher than other periods.