"Fourteen people have been killed and 70 injured, many seriously, in the car bombing," said doctor Ammar Subhi Zidan at Khalis hospital on Tuesday. 

He said the attack, "the bloodiest" car bombing since the handover of power, took place around 4:15pm (12:15 GMT).

The bomb exploded near a house where a memorial service was being held for two Iraqis killed in an attack on Sunday in Baquba, said General Walid Abd al-Salaam, police chief of the Diyala province.

US troops rushed to the scene of the attack as people in the area fired shots into the air in the chaos that ensued.

The US military had no immediate confirmation of the incident.

Baquba, 60km north of Baghdad, was the scene of street fighting and attacks that killed dozens of people, mostly policemen and fighters in late June.

Basra blast

"The bloodiest" car bombing since the handover of power, took place around 4:15 pm

Dr Ammar Subhi Zidan,
Khalis hospital

In another incident, a roadside bomb was detonated as a convoy of oil security guards drove through the southern city of Basra on Tuesday, killing a passerby and wounding two others, police at the scene said.

Witnesses said the security guards, part of a force set up to protect Iraq's oil infrastructure, were unharmed.

Last month, exports were halted entirely for several days after the two main southern pipelines feeding Iraq's export terminals, were blown up.