Another 31, mostly children, were also wounded in the blast, one US soldier died and three were injured.
“Children gathered around the Americans who were handing out sweets. Suddenly a suicide car bomber drove around from a side street and blew himself up,” Sergeant David Abrams said.
Witness Mohammed Ali Hamza said US forces had gone to the south-eastern district of Al-Jedidah to warn residents to stay indoors because of reports of a car bomb in the area.
At Kindi hospital hundreds of distraught parents searched for their children, many of whom were badly mutilated.
“We have received the bodies of 24 children aged between 10 and 13,” said the official in charge of the morgue.
Abu Hamed, whose 12-year-old son Mohammed was killed, said: “I was at home. I heard the explosion. I rushed outside to find my son. I only found his bicycle.”
He found his son in the hospital morgue.
Hassan Mohammed, whose 13-year-old son Alaa also died, swore at insurgents for attacking civilians.
“Why do they attack our children? They just destroyed one US Humvee, but they killed dozens of our children,” he said.
Meanwhile, a Sunni Muslim religious official said the tortured bodies of 11 Sunni Arabs, who were killed execution-style with a bullet to the head, were found in Baghdad on Tuesday.
The men, who were accused of aiding insurgents, were arrested during police raids on their homes two days earlier, he said.
But Hussein Ali Kamal, deputy minister for intelligence at the interior ministry, said it was not known who was responsible for the killings.
“Every day we find innocent people killed and their bodies dumped in the streets. We don’t know who is responsible. The minister has ordered that a special committee be set up to look into this.
“There are people who dress up in police or commandos uniforms to carry out, even at night, horrible attacks which are then blamed on police,” he said.
There have been allegations of mistreatment and killings of Sunnis — who are provide the backbone to the insurgency — by police over the past few months.
The growing tensions between Sunnis and the majority Shi’ites came amid reports of a suicide attack against a Sunni mosque near the Iranian border on Tuesday, which killed two.