At least eight people were killed and 23 wounded on Tuesday in a car bomb attack in Khales, near the restive Iraqi town of Baquba, police said.
"Eight people have been killed and 23 injured, many seriously, in the car bombing," doctor Ammar Sobhi Zidan at Khales Hospital said.
He said the attack, which is the bloodiest car bombing since the hand over of power by the US-led coalition on June 28 to a caretaker Iraqi government, struck at about 4:15 pm (12:15 GMT).
The bomb exploded near a house where a memorial service was being held for two Iraqis killed in an attack on Sunday in Baquba, police chief of the surrounding Diyala province General Walid Abdul Salam said.
US troops rushed to the scene of the attack as people in the area fired shots into the air in the chaos that ensued, an AFP correspondent said.
The US military had no immediate confirmation of the incident.
Two US marines were killed in action and one died later from wounds received during an operation on Monday in a restive Iraqi province, the US military said on Tuesday.
"Two marines assigned to First Marine Expeditionary Force were killed in action and one marine died of wounds received in action on Monday in the (centre-west) Al-Anbar province, while conducting security and stability operations," the military said in a statement.
US soldiers shot dead one Iraqi child and wounded another when the car their father was driving failed to stop at a checkpoint in Baghdad on Monday night despite repeated warnings, the US military said on Tuesday.
"US soldiers fired on an Iraqi vehicle that failed to obey verbal and visual warnings to stop near western Baghdad at about 10:30 pm (1830 GMT) on July 5," it said in a statement.
"Reports are that the vehicle had switched its lights off as it approached the checkpoint and attempted to bypass it, and that soldiers yelled for the vehicle to halt and guards had to jump out of the way," the military said.
"Soldiers then fired at the vehicle."
Iraqi police questioned the father after the incident, while the mother and her wounded child were taken to a Baghdad hospital.