The bomb went off in a busy staging area in the oil-refining town of Baiji, 180km north of Baghdad, as a US military patrol was passing on Tuesday. The blast destroyed market stalls and caused panic among scores of shoppers, witnesses said.
A doctor at Baiji hospital, Samir Mahdi, said he had received seven dead civilians from the blast and 18 wounded. A US military spokesman said two US soldiers were wounded.
As well as daily attacks on Iraqi security forces and civilians, November was one of the deadliest months for US troops, with at least 134 killed - just one short of the figure in April which remains the highest monthly toll so far.
In a separate incident in the town, a fighter fired a rocket-propelled grenade at a US tank, wounding a US soldier and damaging the tank, the US spokesman said.
And in Baghdad, a car bomb exploded near a US convoy on the road to the airport, killing the driver and wounding five soldiers, the military said.
Baiji, site of a major oil refinery,
has seen an upsurge in violence
Baiji, site of a major oil refinery, has seen a surge in violence over the past three weeks, since US forces launched their offensive on Falluja.
Elsewhere in Iraq, an explosive device was detonated on Tuesday in northern Iraq, setting ablaze a pipeline transporting crude oil to al-Masyab thermal power station, south of Baghdad, Aljazeera has learned.
The US military says it expects more attacks in the build-up to January elections and has said it will do all it can before then to quell the violence and put Iraqi forces in charge of security.
Fighters opposed to the presence of foreign troops in Iraq are determined to disrupt the elections and topple the American-backed government, have repeatedly attacked US forces, Iraqi police and soldiers.
At least 1254 US soldiers have been killed in Iraq since last year's invasion. More than 9000 US troops have been wounded, 5000 of them seriously and 15,000 are estimated to have been evacuated from Iraq with non-combat injuries.
As part of efforts to generate enthusiasm for the elections, interim Prime Minister Iyad Allawi said on Tuesday he would travel to Jordan this week for talks with Iraqi exiles.
The government dismissed reports that exiles with links to the anti-US fighters would be present at the talks.
Leading Sunni political parties want the elections postponed by up to six months, saying their supporters will not be able to vote freely because of violence in Sunni areas.
Allawi will meet Iraqi exiles living
Sunni Muslims make up about 20% of Iraq's population but dominated the ruling elite during the rule of Saddam Hussein.
Several Sunni parties say they will boycott the elections unless the government agrees to postpone them.
The mainly Sunni Association of Muslim Scholars in Iraq accuses US troops and the US-backed interim government of being behind the assassination of a number of its members across Iraq.
Shaikh Harith al-Dhari, secretary-general of the association, said his organisation opposed general elections in the country "while under foreign occupation".
But parties representing Iraq's 60% Shia Muslim majority, oppressed under Saddam, are demanding polls go ahead on time to cement their political dominance in the new Iraq.
Backed by Ayat Allah Ali al-Sistani, Iraq's most revered religious leader, Shia parties have refused to accept any delay, saying that would mean giving in to violence.
Iraq's two main Kurdish political parties initially signed a petition calling for a delay in the vote, but have since said they would be happy for the election to go ahead as scheduled.