A suicide attacker detonated a massive car bomb at a checkpoint near the British Embassy and headquarters of the interim government, killing at least 10 people and wounding 40, including a U.S. soldier, authorities said.
The suicide attack was the worst in Baghdad since the United States transferred sovereignty to the interim Iraqi government on June 28.
Elsewhere, insurgents tossed hand grenades and fired machine guns at a government convoy in the south of the city of Mosul, killing the governor and two of his guards, an Interior Ministry official said.
Attackers approached the convoy of Gov. Youssef Kashmola 60 miles south of Mosul as he was traveling to Baghdad, an Iraqi Interior Ministry official said on condition of anonymity.
Militants said they had killed a captive Bulgarian truck driver and threatened to put another Bulgarian hostage to death in 24 hours, Al-Jazeera television reported Wednesday.
Hours earlier, the Philippines said it had begun withdrawing its small peacekeeping contingent from Iraq, an apparent bid to placate militants who threatened to kill a Filipino hostage if the troops were not out by July 20.
In other developments:
The car bomb shook buildings throughout central Baghdad at about 9:15 a.m., when a suicide bomber detonated a car packed with 1,000 pounds of explosives. The bomb killed four Iraqi national guardsmen and seven Iraqi civilians, the U.S. military said. Many of the civilians were waiting in line to apply for jobs, presumably with the new Iraqi government or multinational forces.
"We were thrown on the ground. Then I saw many dead people on the ground," witness Alla Hassan said.
The U.S. military said 11 people were killed in the blast. The Iraqi Health Ministry said 10 were killed.
The attack targeted a checkpoint leading to a parking lot in the area formerly known as the "Green Zone," the heavily protected Baghdad neighborhood housing government offices and the U.S. and British embassies, Iraqi police Col. Tawfeeq Sayer said.
"This is a naked aggression against the Iraqi people. We will bring these criminals to justice," interim Prime Minister Iyad Allawi said during a visit to the scene.
Allawi said the attack was retaliation for the government's arrest of suspected terrorists, though he offered no details on suspects. The government said Tuesday it had arrested more than 500 suspected criminals in a police sweep of militants in Baghdad.
The blast occurred on a national holiday marking the 46th anniversary of the bloody nationalist coup that killed Iraq's last king, Faisal II.
One American soldier was slightly wounded, said Col. Mike Murray of the 1st Cavalry Division.
A Reuters driver suffered a shrapnel wound in the leg, agency spokeswoman Susan Allsopp said from London. The driver's condition was not considered serious.
The attack followed a period of relative quiet in Baghdad, but insurgents in other parts of Iraq remained active, continuing to attack U.S. and Iraqi forces and take hostages.
Kidnappers holding the Filipino, Angelo dela Cruz, said they would treat him like a prisoner of war if Manila made a good-faith move toward withdrawing its 51 troops early and would free him if the pullout was completed by July 20. The government statement Wednesday did not clarify when the pullout would be finished but appeared directed toward that demand.
"The Foreign Affairs Ministry is coordinating the pullout of the humanitarian contingent with the Ministry of National Defense," the statement said. "As of today, our head count is down from 51 to 43."
The statement was vague, following a pattern of unclear statements as the Philippines has tried to both save dela Cruz and avoid the impression that it's giving in..
The government was already set to withdraw its troops Aug. 20. A full withdrawal before then would be a major blow to the unity of U.S.-led coalition in Iraq.
There was no immediate U.S. response to the latest announcement, but U.S. officials had earlier expressed displeasure that Manila was even considering caving in to the kidnappers' demand, a position echoed by Australia and Iraq's new interim government.
In Bulgaria, government officials expressed outrage Wednesday over the execution of a Bulgarian truck driver in Iraq and urged militants to release a second Bulgarian hostage. Despite the slaying, they said Bulgaria remained committed to helping rebuild the turmoil-wracked country.
The killing was first reported by Al-Jazeera. It cited Jordanian militant Abu Musab al-Zarqawi's Tawhid and Jihad group as saying the group had executed one of the truck drivers and threatened to put another Bulgarian hostage to death within 24 hours.