A car bomb in a busy market in the southern Iraqi city of Diwaniya killed at least 40 people and wounded 75 others, a provincial council official said.

A hospital source in the city, 160 kilometres south of Baghdad, confirmed receiving 25 bodies.

Earlier on Tuesday, two roadside bombs targeting Shia pilgrims killed four people and wounded 21 near Kerbala, a city in central Iraq, hospital and police sources said.

The attack, 80km south-west of Baghdad, is the latest in a series of bombings in Iraq aimed at Shia worshippers. Shia pilgrims in Kerbala will be celebrating the birthday of an important imam in the coming days.

Deadly month

Increased attacks in recent weeks have raised fears that the country could slip back into widespread sectarian violence.

Last month at least 237 people were killed and 603 wounded mainly in bomb attacks, according to Reuters news agency, making June one of the bloodiest months in Iraq since US troops withdrew at the end of last year.

The worst attack occurred on June 13 when bombers targeting Shia pilgrims killed more than 70 people.

Sunni insurgents often attack Shia targets to try to reignite the sectarian violence that killed tens of thousands of people in 2006-2007.

Iraq's al-Qaeda wing has claimed some of the recent bombings against Shia targets.

The government's Sunni, Shia and ethic Kurdish parties have also been locked in political battles that threaten to shatter their delicate power-sharing agreement.

Source: Agencies