"People stayed near the bomb, people would not leave, the Americans put something on the bomb to cover it when the soldiers backed off from the bomb, someone detonated it by remote control," said Sergeant Muhi Naimi on Friday.
Haidar Khudayr, 15, had been playing football in an abandoned lot with friends when people spotted a bomb hidden in a garbage bag on Haifa street, said Naimi, an officer who rushed to the scene.
But police struggled to push people back. Even after US troops arrived, they could not chase onlookers out of the immediate area when an assailant blew the bomb up by remote control, Naimi said.
Muhi said Khudayr had been watching the soldiers from the wall of the abandoned lot where he played football when the shrapnel hit him.
Five others were wounded, two of them seriously, with the oldest of the casualties being 30 years old, he said. Medics confirmed the toll.
At Al-Karkh hospital, family members claimed Khodayr's body and fastened his wooden coffin to the top of a beaten-up car. "No to America, No to Saddam, No to Bush," Khodayr's distraught older brother shouted, his arms trembling, before his family drove away.
The US military earlier confirmed the blast but said only that three civilians and a translator were wounded when the bomb exploded before the US Army could disarm it.
The Iraqi capital has been hit by a string of attacks, culminating in a New Year's Eve car-bomb blast at a popular restaurant that killed eight people.
In other developments
Three civilians were killed and two wounded on Thursday night when a bus struck an explosive device near Tikrit, the hometown of Saddam Hussein, the US Army said.
The army had earlier said there were at least two dead and one wounded.
"It was probably a mine that the bus ran over," said Lieutenant Colonel Steve Russell of the 1-22 Battalion.
Russell denounced the latest attack claiming innocent civilians in the nine-month battle between US forces and anti-occupation fighters.
"It was a cowardly attack," Russell said.
He said the front of the bus struck the explosive device and the vehicle was mangled.
There were no further details available about the blast, 180 kilometres north of Baghdad.
The 4th Infantry Division was also looking into a second explosion in the area.