A bomb hidden in a box of birds killed 13 people and wounded 57 at a popular pet market in central Baghdad on Friday, police and witnesses said, describing the deadliest attack in the Iraqi capital in two months.

Body parts were strewn across the ground as bystanders piled victims into carts and rushed them to ambulances.

Police said four policemen were among the wounded in the bombing at the Ghazil pet market.

Other police sources said there were reports of a car bomb near a major Baghdad hospital but no other details were immediately available.

The market attack was the worst since 32 people were killed by twin car bombs in the predominantly Shi'ite district of Bayaa in southwestern Baghdad on September 26 and could dent new-found confidence among Iraqis that security is getting better.

Levels of violence have fallen across Iraq in recent months, with the U.S. military saying attacks were down by 55 percent since an extra 30,000 U.S. troops became fully deployed in mid-June.

Something approaching normal life has been starting to return to Baghdad with the lull in bloodshed. Thousands of Iraqis have also been returning home after fleeing the violence.

Iraqis have been going to markets and to restaurants at night, both unheard of at the height of the violence after the bombing of a revered Shi'ite shrine in Samarra in February 2006 unleashed waves of sectarian killings.

The people were happy the last two weeks because the situation has improved. This explosion disturbs us, said Ghazil stallholder Salim.

The pet market, a popular weekend spectacle, sells a colorful range of creatures from guard dogs and monkeys to parrots, pigeons and tropical fish.

It has been targeted several times in the past. Seven people were killed there in a blast in January, a month after three people were killed in another attack.

STAINED WITH BLOOD

Bystanders and stallholders covered their noses with masks because of the stench after the bombing. Stallholder Mohammed Abu Salim said police fired into the air after the blast.

We expected another explosion so we all ran away, he told Reuters. Then we went back to evacuate the wounded. I saw someone at a sandwich booth, he was burned completely, smoke was coming from his body. Another person lost both his legs.

Another witness, who did not give his name, said the bomb went off at about 9 a.m. (0600 GMT) and had been hidden in a box used to keep birds sold at the market. He said he had helped remove about a dozen bodies.

I have already changed my clothes, they were stained with blood, he said.

The increase in U.S. troops has targeted Shi'ite militias and al Qaeda fighters who are blamed for most large-scale bombings in Iraq. U.S. commanders however say that overall levels of violence in Iraq remain too high.

On Thursday, 10 mortar bombs landed in Baghdad's Green Zone, the heavily fortified central Baghdad compound which houses the U.S. embassy and the Iraqi parliament, in an attack coinciding with the U.S. Thanksgiving holiday.

The growing use of neighborhood police units, organized by mainly Sunni Arab tribal sheikhs, has also been credited for playing a part in bringing violence levels down.

But the neighborhood police units, organized by Awakening Councils of tribal leaders, have also become targets for attacks in recent weeks.

Police said al Qaeda militants killed eight members of a neighborhood police patrol on Thursday in Baghdad, raking them with heavy machinegun fire from a stolen Iraqi army vehicle.

(Editing by Dean Yates and Elizabeth Piper)

Iraq Terrorism