A car bomb explosion near a Kurdish party office has killed two Kurdish security recruits and wounded five in a disputed city north of the capital, Baghdad.

Security officials said the blast on Sunday targeted the Patriotic Union of Kurdistan (PUK) office in Jalawla some 125km northeast of Baghdad.

An officer in the Jalawla police said the bomb exploded at the local headquarters of Iraqi President Jalal Talabani's Patriotic Union of Kurdistan after a number of people seeking to join the Kurdish Peshmerga security forces had gathered.

Both Arabs and Kurds claim Jalawla, and a local policeman said the violence resulted from the tensions. He did not explain further, but mostly Arab Sunni insurgents have made use of ethnic rivalries.

Ethnically mixed Jalawla is in Diyalah province, and is one of the areas which Iraq's autonomous Kurdistan region wants to incorporate, over the strong objections of Baghdad.

The dispute over territory in northern Iraq is the greatest threat to the country's long-term stability, diplomats and officials say.

Ties between Baghdad and Kurdistan are also marred by disputes over oil and power-sharing.

Source: Agencies