A car bomb has hit a commercial area in central Baghdad, killing at least 17 people and wounding 20 others, Iraqi police say.
Several cars were set on fire by the Baghdad blast
Police said the blast missed a convoy of vehicles of the kind used by foreign security contractors.
There was no immediate word on the blast from the US military.
It comes days after Iraqi Prime Minister Iyad Allawi declared a state of emergency throughout most of Iraq and imposed a curfew on the capital.
The blast happened around Nasser Square in the Saadoun district, a densely populated commercial area with major hotels housing foreigners.
The explosion set number of cars on fire and a plume of black smoke rose over the busy Saadoun district.
A crater was gouged in the road and the force of the blast caused a nearby building to collapse.
Rescue workers scoured the rubble for survivors.
Ambulance sirens were heard wailing in the area and twisted metal and broken glass littered the streets.
Some people were said to be trapped inside burning cars, and one vehicle was seen dangling dangerously from a nearby five-storey building, where it had been thrown by the force of the explosion.
Witness Hussein Ali, still stuttering from the shock, told AFP news agency: "As we were driving very slowly because of the traffic jam, a car in front suddenly blew up."
Iraq has seen a number of attacks in recent days which the US military has said are linked with the current US-led operation to take the city of Falluja from insurgents.
There have been clashes in some Baghdad suburbs over the past few days despite the night-time curfew.
On Wednesday, a car bomb near the culture ministry killed seven people.