A car bomb targeting a US military convoy has exploded near the Australian embassy in central Baghdad killing at least two people. "Two people were killed, they were Iraqi, and several people wounded," said police lieutenent Abbas Fadil. The incident took place several hundred metres away from the embassy building. Interior ministry spokesman Colonel Adnan Abd al-Rahman said the bomb targetted the convoy as it passed through the neighbourhoods of Karrada and Jadiriyah. An AFP reporter at the scene saw the damaged army vehicle, with its tyres flattened by the force of the blast that occurred at about 8am (0500 GMT). The US military had no immediate comment, and it was unknown whether there were any American casualties. Soldiers sealed off the area. A huge cloud of smoke was seen rising over the western bank of the Tigris river. US helicopters were seen flying over the area. Last week, the Australian government announced that the embassy would be moved early next year from its current location to the heavily fortified Green Zone, which houses the US and Iraqi leadership. A car bomb blast on 17 October hit a cafe close to the Australian embassy, killing six people. No Australians were hurt in that blast, which authorities believe was aimed at an Iraqi police convoy. Elsewhere on Monday, a car bomber has attacked a US convoy near the western Iraqi town of Khaldiya, local police and witnesses said. They said several vehicles have been damaged in the blast, and spoke of several US casualties. The US military had no immediate information on the attack. **PHOTO CAPTION*** A packet of cigarettes lies on the body of a killed army recruit, close to the city of Baquba, 60 kms northeast of Baghdad. (AFP)