The mainly Shia area was busy with shoppers late at night because it is the holy month of Ramadan.

Iraq's Prime Minister Haider al-Abadi was met by angry crowds while visiting the scene of the blast on Sunday.

A second bomb also exploded at about midnight in a predominantly Shia area north of the capital, killing another five people.

The bombing in Karrada is the deadliest in Iraq this year and comes a week after Iraqi security forces recaptured the city of Falluja from Islamic State (IS) militants.

Authorities said Falluja was used as a launch pad for attacks on Baghdad.

The US said on Sunday that the latest attack strengthened its resolve to support Iraqi forces in their fight against IS.

"We remain united with the Iraqi people and government in our combined efforts to destroy Isil," the White House statement said, using another term for the group.