A car bomb exploded in a crowded market place in northern Kirkuk Monday, killing two people and wounding 10 others, Iraqi police and hospital sources said, Reuters reported.
The death toll is expected to rise, police said.
Violence has dipped sharply in Iraq over the past 18 months but attacks remain common in volatile areas like the oil city of Kirkuk.
Kirkuk is one of several flashpoints between Iraq's Arab-led government in Baghdad and minority Kurds that U.S. officials fear could lead to renewed conflict in Iraq.
Kurds see the city and surrounding province, which lies over one of Iraq's longest producing oilfields, as their ancestral home and want it wrapped into their semi-autonomous enclave. The city's Arab and Turkmen populations fiercely oppose those aims.
The tensions between both sides are often exploited by insurgent groups trying to reignite the sectarian warfare that almost tore Iraq apart.