The attack took place before noon when a booby trapped car detonated at the crowded 55 intersection in the Shiite neighborhood of Sadr City in eastern part of the Iraqi capital, the source said on condition of anonymity.

The massive blast destroyed several shops nearby and many stalls at an outdoor market, setting fire to several vehicles, the source said.

No group has so far claimed responsibility for the attack, but the Islamic State (IS) militant group, in most cases, is responsible for bombings targeting Iraqi security forces as well as crowded areas, including markets, cafes and mosques across the country.

The attack came amid a major offensive by Iraqi security forces, backed by an international coalition, to drive out IS militants from its last major stronghold in and around Mosul.

Many blame the current chronic instability, cycle of violence, and the emergence of extremist groups, such as the IS, on the US, which invaded and occupied Iraq in March 2003.