Chlorine gas, which is toxic and can irritate the respiratory system, is used for water purification.
Five more people were killed and at least 19 wounded in a second car bomb attack at the Al-Rasheed food market in western Baghdad, officials said.
The attacks come after two days of bombings and shootings which left more than 100 people dead and deflated early optimism over a security crackdown in Baghdad.
Tens of thousands of US and Iraqi troops have been deployed as part of a new plan aimed at bringing the country's sectarian violence under control. US outpost attacked
The US military confirmed late on Monday that two soldiers had been killed in a "co-ordinated attack on a coalition force combat outpost" in Tarmiyah, about 30km north of Baghdad.
"Have any of the Bush Iraq plans worked other than causing the worst destruction?"
Zaffar Zohair, Islamabad, Pakistan
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The combat outposts have been created in several districts as part of Operation Imposing Law. US troops conduct operations from them rather than returning to military bases.
"Insurgents initiated the attack on the outpost with a suicide vehicle-borne improvised explosive device detonation," a US statement said.
Witnesses and local authorities said at least one car was driven into the concrete outer barriers around the base, a former Iraqi police station, igniting stored fuel before troops came under fire from an armed group.
Mohammed al-Askari, spokesman for Iraq's defence ministry, blamed the attack on al-Qaida in Iraq.
Nine US service members have been reported killed since the beginning of the weekend, six of them on Monday.