The attack took place on Monday night when an explosives-laden car was detonated near Abdul-Majid Hospital on a busy thoroughfare in Karrada neighborhood of southern central Baghdad, Xinhua news agency quoted the source as saying on condition of anonymity.
The security forces sealed off the area and blocked the roads leading to the blast scene, while ambulances and police vehicles evacuated the injured people to the city hospitals, the source said.
Early in July, Karrada was the scene of massive bombing that killed and wounded hundreds of people.
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Iraq has witnessed worsening violence since the Islamic State (IS) group took control of parts of its northern and western regions in June 2014.