Iraq Isis bombing in Baghdad
Sunni worshippers attend prayers at a mosque during Eid al-Fitr to mark the end of Ramadan in Baghdad Ahmed Saad/Reuters

Islamic State (Isis) has claimed responsibility for the suicide bombing on a Baghdad neighbourhood which killed more than 100 people, including many women and children, during Ramadan celebrations.

The blast ripped through the Shiite-dominated Iraqi town of Khan Bani Saad, located about 30kms from capital Baghdad, when the locals were marking the end of Ramadan, the month Islam considers holy.

The Friday (17 July) evening bombing injured at least 100 others, local reports suggest. The blast was carried out by a suicide bomber when he rammed a tanker truck, laden with explosives, into the crowded market area in Diyala province.

Multiple Twitter accounts which are usually linked to the Islamist group said IS staged the bombing as a revenge for "massacre of Sunnis".

An IS statement said: "We ask God to accept our brother in heaven," adding that the blast was set off by Abu Ruqaya al-Ansari using three tonnes of explosives "in a gathering of Rafidha [a derogatory term referring to Shiite] militias".

Enraged locals went on the rampage damaging nearby buildings and vehicles following the blast.

"Some people were using vegetables boxes to collect body parts of kids' bodies," senior police official Ahmed al-Tamimi, who was at the scene, told Retuers.

Television images aired by local channels showed several fully gutted buildings and debris strewn over a distance.