At least eight people were killed on Wednesday when a suicide bomber strapped with explosives attacked a crowd of labourers in central Baghdad, an Interior Ministry source said.

Hospital sources said at least 65 people were wounded.

"We were eating breakfast and we heard an explosion. We went to see what happened and we saw people torn apart on the pavement," said Mohammed Daoud, a laborer.

The attack took place in New Baghdad. Police sources said earlier the explosion hit the Baab al-Sharjee area of Baghdad.

Insurgents waging a campaign to topple the government have killed many thousands of security forces and civilians.

Meanwhile US troops in Iraq fired warning shots at the Canadian envoy's car on Tuesday after his convoy failed to slow down while approaching an American military convoy, the US

military said on Wednesday.

A statement said the shots were fired inside the heavily fortified Green Zone, which houses the Iraqi government and diplomats and is the headquarters of the US military.

"The Canadian ambassador's vehicle did sustain damage yesterday from US military gunfire," said the statement.

"The rear guard on a US convoy signaled the vehicle to stay back. After it failed to do so and continued moving toward the convoy from behind, warning shots were aimed at the front of the vehicle, away from the passenger area."

The US military said there were no injuries.

"The incident is under review to determine why it was necessary to fire warning shots," said the statement.

Iraqis often complain that US troops are too quick to fire. American soldiers, who have come under attack by suicide bombers in cars, say they give motorists ample time to slow down before firing shots.