At least 11 people have been killed by a truck bomb outside the Jordanian embassy in Baghdad.
US troops quickly descended to clear the area
Some of those killed are thought to have been in cars parked close to the embassy.
The Jordanian Information Minister, Nabil al-Sharif, called the attack - in which the bomb appears to have been concealed inside a minibus or sports utility vehicle - a "cowardly terrorist" act.
In a separate incident on Thursday an American forces Humvee vehicle was blown up by what was reported to be a rocket-propelled grenade.
A firefight broke out between US troops and unknown attackers and one injured American soldier was seen being carried from the scene.
On Wednesday two American soldiers died in a firefight in the al-Rashid district of Baghdad.
In Washington, Secretary of State Colin Powell admitted US troops still had much to do bring the situation under control in Baghdad and blamed Iraqi fighters loyal to ousted leader Saddam Hussein and "some from the outside" for the unrest.
The attack on the Jordanian embassy reduced the front of the building to rubble and shrapnel was found as far as 1,000 metres from the scene and on nearby rooftops. Human remains were visible in a compound close to the embassy.
A Jordanian official said he thought a missile was fired at a car to set off a load of explosives packed inside.
It is unclear how many people were injured in the blast, with reports suggesting about 50 people were rushed to hospital.
A US army spokesman said 130-230 kilograms (300-500lb) of explosives were probably used in the bomb.
"I saw a long vehicle approach the embassy," police officer Hekmat Ibrahim told the AFP news agency as he was leaving the nearby Iskan children's hospital, his head bandaged.
"I heard a huge explosion. I was blown back and I fell unconscious."
An Iraqi embassy guard being treated at another hospital, Shaheed Mazloum, said he had heard two explosions.
"I was sitting in the reception," he told news agency AP.
"I heard the first explosion. I ran out and then there was another explosion. Many employees were inside the embassy as well as Iraqis and Jordanians. Smoke filled the street," he said.
After the embassy explosion, dozens of angry Iraqis stormed the building, smashing portraits of Jordan's King Abdullah II and his father King Hussein.
The crowd was quickly dispersed by US soldiers and Iraqi police.
No one has claimed responsibility for the attack but an investigation has begun.
Correspondents say the groups responsible for the regular attacks against US troops in Iraq are almost certainly behind this incident.
In past years Jordan has found itself caught in the middle of Iraq's relations with the West, says our Baghdad correspondent Matthew Price.
Many Iraqis believe Jordan took advantage of tough UN sanctions on Iraq, acquiring cheap oil from the oil-for-food programme, while offering tacit support to Saddam Hussein's regime.
Last week Jordan granted refuge to two of Saddam's daughters and their children. However, it has frequently been reluctant to offer fleeing Iraqis similar sanctuary, Iraqis complain.
Jordan also supported the recent US-led war in Iraq. US troops used Jordanian territory for bases.
Jordan is thus resented both by Iraqis who opposed Saddam's regime and those who supported it, our correspondent says.