Friday's bloodletting came as Prime Minister Ibrahim al-Jaafari attempted to put the final touches to his cabinet line-up, three months after general elections and more than a week after unveiling a partial government list.
"A car bomb with a suicide driver exploded at around 3pm in the Mokhadar market, in the centre of Suwayrah, killing 17 and wounding 40," police Captain Namir Ali said earlier.
Hospital and police sources later revised the figure killed to at least 58.
The blast blew market stalls to pieces, and panic reigned amid the carnage as medics tried to treat the most urgent cases next to the mangled wreckage of vehicles.
Suwayrah lies in a lawless area where Sunni Arab groups have carried out scores of attacks against security forces and imposed their authority on civilian residents.
Iraqi policemen and soldiers are
being slaughtered almost daily
Last month, about 60 bodies were fished out of the Tigris river near Suwayrah. President Jalal Talabani said the bodies were those of Shias seized in a mass hostage-taking by Sunni fighters in the nearby town of al-Madain.
Earlier on Friday, a bomber rammed his car into a minibus carrying policemen near ousted president Saddam Hussein's hometown of Tikrit, killing eight policemen and four civilians, including a child, according to a medic.
More than 300 people have already died this month in at least 30 car bombings and other attacks.
Also on Friday, Iraqi police said they found 14 bodies in northeastern Baghdad, blindfolded and with hands bound, executed with a bullet to the back of the head.
Moktada al-Sadr continues to
command a loyal Shia following
Residents had told them that a bulldozer was being used to bury bodies in a vacant lot in the Kisra wa Atash district.
"When police arrived on the scene, the driver of the bulldozer ran away. We found two bodies on the spot and 12 more when we dug up the area," an Interior Ministry official said.
Kisra wa Atash lies on the edge of Sadr City, the impoverished two-million-strong base of Shia cleric Moktada al-Sadr, controlled by his Mahdi Army militia.
The incidents in Suwayrah and near Sadr City fuelled fears of sectarian violence between the ousted Sunni elite and Iraq's newly empowered Shia.
In the Shia heartland, five people were wounded when clashes broke out between police and worshippers leaving prayers in the central shrine town of Kufa after a fiery sermon by al-Sadr.
"You should be aware of the fact that Mahdi Army is still alive and has its finger on the trigger"
Moktada al-Sadr group's statement
"If you leave us in peace, we will leave you in peace. You should be aware of the fact that the Mahdi Army is still alive and has its finger on the trigger," said the sermon read by another cleric.
The Shia leader had officially pledged to disarm and join the political arena after months of intense fighting with US troops last year, but he has kept his options open since then and his militia remains an organised force.
The Shia alliance that won the 30 January elections holds a majority in parliament and was to meet later on Friday Sunni representatives in a bid to fill the remaining posts in the government line-up.
Several cabinet posts, including the key oil and defence portfolios, were left vacant when the new government was initially introduced last week because of last-minute bickering between the factions, politicians said.
Shia MP Ali Dabbagh said agreement had been reached among the Shia coalition partners on naming one of its own, Ibrahim Bahr al-Ulum, as oil minister.
A spokesman for al-Jaafari's Dawa party, Jawad Talib, confirmed that agreement had been reached on appointing Bahr al-Ulum to the post he already held under the initial Iraqi administration set up by the US-led occupation.
Reference to federalism was
dropped from the cabinet oath
Shia and Sunni leaders would meet to discuss the appointment of Sunni Saadun al-Dulaimi to the post of defence minister and of Shia Mohsen Shalash as minister for electricity, Dabbagh said.
But in a new sign of tension within the governing coalition, Kurdish leader Massoud Barzani warned on Friday that the removal of a reference to federalism in the oath sworn by incoming ministers on Tuesday could threaten the Kurds' alliance with the Shia bloc.
The principle of federalism is of paramount importance to the Kurds, who already enjoy a high level of autonomy in northern Iraq and want to see it enshrined in the permanent constitution, which is to be drafted this year.