A military statement said an explosion took place in Sadr City but gave no details.
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There was no immediate claim of responsibility. It was the second attack to hit Sadr City and the third to target a busy market this year in Baghdad.
In April four people were killed and 20 wounded in a car bomb attack in the same neighbourhood. And in January a suicide attack killed at least 32 people in a crowded market.
Both attacks were claimed by Islamic State militants.