It is believed to have occurred near a busy marketplace; witnesses told the Reuters news agency that women and children were among the dead.
Another explosion at an Iraqi army checkpoint in Sadr city near Baghdad left more than 30 dead while a bomb in the capital killed about a dozen.
Such levels of violence have not been seen since a US-Iraqi campaign to improve security in the capital began in February.
The bombings undermine the expressed confidence of the Iraqi prime minister Nouri al-Maliki, who said today that the need for foreign forces' control will ease throughout the years.
In comments made at the handover of Maysaan province in the south of the country from British control, Mr al-Maliki said: "It will be province by province until we achieve [this transfer] before the end of the year."
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