A car bomb claimed by the Islamic State group in a Shiite Muslim district of Baghdad killed at least 63 people and wounded more than 78 others on Wednesday, Iraqi police and hospital sources said, the largest attack inside the city for months.

Security has gradually improved in the Iraqi capital, which was the target of daily bombings a decade ago, but violence directed against the security forces and Shiite civilians is still frequent. Large blasts sometimes set off reprisal attacks against the minority Sunni community.

The fight against the IS group, which seized about one third of Iraq's territory in 2014, has exacerbated a long-running sectarian conflict in Iraq mostly between Sunnis and the Shiite majority that emerged after the US-led invasion in 2003.

Such violence threatens to undermine US-backed efforts to dislodge the militant group.

Wednesday's attack in Sadr City could also intensify pressure on Prime Minister Haider al-Abadi to resolve a political crisis that has crippled the government for more than a month.

A pickup truck packed with explosives went off at rush hour near a beauty salon in a bustling market. Many of the victims were women including several brides who appeared to be getting ready for their weddings, the sources said.

The bodies of two men said to be grooms were found in an adjacent barber shop. Wigs, shoes and children's toys were scattered on the ground outside. At least two cars were destroyed in the explosion, their parts scattered far from the blast site.

Puddles of blood

Rescue workers stepped through puddles of blood to put out fires and remove victims. Smoke was still rising from several shops hours after the explosion as a bulldozer cleared the burnt-out chassis of the vehicle used in the blast.

The IS group said in a statement circulated online by supporters that it had targeted Shiite militia fighters gathered in the area.

Iraqi forces backed by airstrikes from a nearly two-year-old US-led campaign have driven the group back in the western province of Anbar and are preparing for an offensive to retake the northern city of Mosul. But the militants are still able to strike outside territory they control.

The ultra-hardline Sunni jihadist group, which considers Shiites apostates, has claimed recent attacks across the country as well as a twin suicide bombing in Sadr City in February that killed 70 people.