At least 18 people have died in an attack on a crowded Baghdad market as deadly unrest continues to rock Iraq.

Police said the attack in the commercial Shaab neighborhood began when gunmen shot five guards at an open-air parking lot that served as a small market.

As bystanders rushed to the scene, a car bomb detonated next to an oil tanker, which exploded and engulfed the area in a fireball.

The ground was littered with remnants of the charred vehicle and sandals and clothes of the many dead and at least 37 injured.

The motive for the attack, which appeared to be intended to kill as many people as possible, was unclear, but it may have been sectarian.

In other unrest on Tuesday, fighting between suspected fighters and Iraqi police killed at least six civilians in Baghdad and officials said roadside bombs had killed three US soldiers.

The shootout in Baghdad broke out in the late morning between gunmen riding in three cars and Iraqi police in Dora, one of Baghdad's most violent neighbourhoods.

The six civilians were killed in the crossfire, said an Iraqi police official.

Elsewhere a US soldier died when a roadside bomb exploded near Rasheed airfield, a former Iraqi air force installation in southern Baghdad, damaging a Humvee and also wounding an Iraqi civilian, said another Iraqi police official.

Two other soldiers were killed when their vehicle struck a roadside bomb near Balad, 50 miles north of Baghdad.

Meanwhile, another roadside bomb destroyed a liquor store in the Iraqi capital in what appeared to be the third attack on the shop by armed men.

None of the stores in Baghdad's Karradah shopping district had opened yet, and the blast caused no casualties, police said.

PHOTO CAPTION

An Iraqi policeman looks at a destroyed shop which sold alcohol after a bomb attack in Baghdad May 16, 2006. (Reuters)