A suicide bomber detonated an explosives-rigged vehicle on Thursday near car dealerships in Baladruz, close to the Iraqi city of Baquba, killing 13 people, police and a doctor said.
The blast in Baladruz, north of Baghdad, also wounded 25 people, the sources said.
The bombing comes as security forces and tribesmen battled Al-Qaeda-linked militants who took control of parts of two cities in Anbar province, west of the capital.
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Violence in Iraq has reached a level not seen since 2008, when the country was just emerging from a brutal period of sectarian killings.
Experts say widespread discontent among Iraq's Sunni Arab minority, who say they are marginalised by the Shiite-lead government and unfairly targeted by security forces, has fuelled the increase in violence.
But while the government has made some concessions aimed at placating Sunnis, including freeing prisoners and raising the salaries of anti-Qaeda militiamen, underlying issues remain unaddressed.
The civil war in neighbouring Syria, which has bolstered militant groups, has also played a role in the heightened unrest.