A bomb in a car parked near a crowded restaurant in a Shi'ite neighbourhood of the Iraqi capital Baghdad killed at least 11 people on Thursday, police sources said.
No one immediately claimed responsibility for the attack, but Sunni Muslim insurgents are redoubling their efforts to undermine the Shi'ite-led government and spark deeper intercommunal fighting.
A further 32 people were wounded in the blast, which occurred in Baghdad's southern Shula district.
Violence in Iraq is increasing as Sunni opposition swells against Shi'ite Prime Minister Nuri al-Maliki, whose power-sharing government of Shi'ites, Sunnis and ethnic Kurds has been largely paralysed since U.S. troops withdrew in December 2011.
Thousands of Sunni Muslim protesters have rallied daily since late December in western provinces against the perceived marginalisation of their sect, a minority in Iraq, and have demanded that Maliki quit.
Iraqi Shi'ite leaders fear that the war in neighbouring Syria - where Sunni rebels are fighting to oust President Bashar al-Assad, an ally of Shi'ite Iran - could further destabilise Iraq's delicate sectarian and ethnic balance.