At least three people were killed and 20 were injured, the military said.
Ambulances raced to the scene and U.S. troops kept people back. Television footage showed debris and a charred wall of a building.
The bomb was one of several blasts heard in the capital just after reports circulated that interim government set to take power June 30., current head of the Iraqi Governing Council, had been selected as president of the
Another blast, followed by gunfire, sent a mushroom cloud 100 feet billowing into the dusty air hanging over the city. Coalition aircraft could be heard flying over Baghdad.
Elsewhere, a car bomb exploded near the U.S. military base in northern Iraq on Tuesday. Eleven Iraqis were killed and 26 were wounded in the explosion, an Interior Ministry source told The Associated Press.
In other developments:
The U.S.-British resolution would authorize American-led international forces to take "all necessary measures" to maintain security and prevent terrorism, while no mention is made of the Iraqi army, except the need for training.
Many other Security Council members have called the U.S.-British draft a good starting point, but suggested revisions.
The approach spearheaded by China and supported by Germany, France and Russia would bolster the sovereign powers of the Iraqi interim government and extend far greater authority than the version introduced by Britain and the United States.
The proposed revisions would give the new government control over the Iraqi army and police and require the multinational force to consult on military actions except for self-defense.
Under the ideas backed by Germany and the other countries, the interim government that takes over on June 30 would have the right to decide whether foreign forces remain in the country and limit the multinational mandate to January 2005.
With more than 800 U.S. military dead since the Iraq war began in March 2003, Washington is eager to see a government that can tackle the security crisis, including a year-old Sunni revolt in Baghdad and areas north and west of the capital and a Shiite uprising to the south.
The appointment of al-Yawer as president brings that government a step closer to reality. On Friday, the far more powerful post of prime minister went to Iyad Allawi, a U.S.-backed Shiite Muslim with military and CIA connections.
Council members had angrily accused the American governor of Iraq, L. Paul Bremer, of trying to install as president Adnan Pachachi, a former foreign minister, over their opposition. The U.S. denied that. When Pachachi turned down the job, al-Yawer was installed.
In Mosul, al-Yawer's hometown, crowds swept into the streets to celebrate the news, cheering and firing weapons in the air. American soldiers there appealed for calm.
The blast in northern Iraq occurred around 9 a.m. outside the gates of the 1st Infantry Division's forward operating base, Summerall, in the town of Beiji, which is 155 miles north of Baghdad, press spokesman Capt. Bill Coppernoll said.
He could not confirm the number of casualties.
Beiji, population 60,000, is Iraq's third-largest city. It sits in the so-called "Sunni Triangle," a swath of land to the north and west of Baghdad mainly inhabited by Sunni Muslims. U.S. forces come under almost daily attacks in the area, where Saddam, himself a Sunni, enjoyed his strongest support.
The PUK, the political party apparently targeted in one of Tuesday's Baghdad bombings, is seen as being close to the Americans. Under the leadership of Jalal Talabani, the party represented one of the main anti-Saddam forces on Iraqi soil after the Gulf War. Fighters from the party backed American forces in last year's invasion.