A bomb blast ripped through a crowded market in Baghdad last night, killing more than 60 people amid growing fears that sectarian violence may once more engulf Iraq as US forces prepare to withdraw.

The blast was the latest in a spate of incidents in recent days and came days after a car bomb targeting a Shia mosque in Taza near the northern city of Kirkuk killed more than 70 people. It was the bloodiest attack in Iraq in 16 months.

The violence is thought to be related to the June 30 deadline for American troops to withdraw from Iraqi cities. It has led to increasing doubts about how well equipped and trained local forces are to maintain security.

Yesterday’s attack was in a bird market in the Shia neighbourhood of Sadr City at 7.30pm. It is believed that a bomb was hidden among fruit and vegetables in a motorised rickshaw, Interior Ministry officials said. About 120 people were injured.

The US handover has been gradual, with forces passing control of Sadr City to Iraqi authorities at the weekend. The area had already been struck with a roadside bomb on Monday that hit a school bus, killing three students and wounding twelve others.

Security in Iraq has improved greatly in the past year, with the civilian death toll at 124 in May 2009, the lowest figure since the invasion in 2003.

The number of deaths has soared in recent weeks, however, and Nouri al-Maliki, the Iraqi Prime Minister, warned that attacks are likely to increase as US soldiers withdraw.

At the weekend he called the bomb in Taza an “ugly crime”, accusing insurgents of trying to spread mistrust of Iraqi security forces. However, he has insisted that Iraq’s police and army are ready to take charge and called the US withdrawal a great victory for his country.

Mr al-Maliki, who has built his political popularity on bringing stability to Iraq, said that any extension of the deadline would show a lack of confidence, adding that “we will not retreat, no matter what happens”.

The June 30 deadline was made in a status of forces agreement between the US and Iraq at the start of the year. A national holiday has been declared for that day, although a curfew may be imposed.

The most recent bomb came after a US military spokesman said that some soldiers would remain beyond the deadline to train and advise security forces. He said, however, that “the amount of forces remaining in the cities for stability operations will be extremely small”.

General Ray Odierno, the US commander in Iraq, who had previously expressed doubts about security in its cities, particularly Mosul, told journalists last week that “the dark days of previous years are behind us”.

There were several violent outbreaks yesterday in Mosul, which is considered by some to be the last holdout of al-Qaeda in Iraq. Seven civilians were killed when a man hit a US patrol with a grenade; an Iraqi soldier was wounded by a car bomb; and an off-duty policeman was shot dead.

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