Two coordinated bomb blasts blamed on al Qaeda killed 55 people in a crowded Baghdad shopping area on Thursday, on the day the U.S. military said it was withdrawing 2,000 troops from the Iraqi capital.

Police said a roadside bomb exploded on a street in the central Karrada district where vendors gather to sell their wares and which many people visit on a Thursday at the start of the Muslim weekend.

Minutes later, after Iraqi security forces and other people had gathered following the initial blast, a suicide bomber detonated a second larger device, police said.

It was one of the bloodiest days in the capital in recent months, since extra U.S. troops were sent to Iraq to quell raging sectarian violence and U.S. commanders embraced new counter-insurgency tactics.

"Terrorists of the al Qaeda network targeted innocent people again," Major-General Qassim Moussawi, spokesman for Iraqi security operations in Baghdad, told state TV. He said the victims were from all Iraq's sects and ethnic groups.

He earlier told Reuters women and children were among the casualties.

A witness at the site of the bombings in a predominantly Shi'ite area of the capital said he had seen people holding body parts and a woman crying in the street as rescuers searched for her sons.

Dozens of shopfronts were damaged and at least 12 ambulances raced to the area, the witness said.

The U.S. military said its soldiers had arrived on the scene after the bombings, which it said involved an improvised explosive device and a bomber possibly wearing a suicide vest. It had no details of casualties.

While violence has subsided across Iraq in recent months, U.S. and Iraqi officials say Sunni Islamist al Qaeda, which they blame for most large-scale bombings, remains dangerous.

On Monday, two bomb blasts in central and eastern Baghdad killed 19 people, despite an increase in security for the visit of Iranian President Mahmoud Ahmadinejad.

Last month, two women killed 99 people in packed pet markets, the bloodiest bombings in the Iraqi capital since last April.

TROOP WITHDRAWAL

The U.S. military said earlier on Thursday about 2,000 U.S. soldiers were being withdrawn from Baghdad as part of a planned reduction of U.S. forces in Iraq.

The 2nd Brigade Combat Team, 82nd Airborne Division, was part of the extra 30,000 soldiers sent last year to stop sectarian violence between Sunni and Shi'ite Muslims that took the country to the brink of civil war.

However, since the extra troops became fully deployed in mid-2007, violence has dropped by 60 percent, prompting General David Petraeus, the U.S. military commander in Iraq, to announce that five of 20 brigades would be pulled out by July 2008.

Stover said the unit, which has been based in northeast Baghdad, would not be replaced after it completed its 15-month tour of duty.

He said there were about 34,500 troops operating in the Iraqi capital out of a total of more than 155,000 U.S. troops across the country.

Stover said there were plans to withdraw another brigade from the Baghdad area as part of the planned cutback, but gave no details of when that would take place.

"Plans are fluid," he told Reuters via email. The U.S. military's intent "is not to give back any part of the city that our soldiers have paid a high price for".

Employing a new counter-insurgency strategy, U.S. forces moved out of large bases and set up patrol bases in neighbourhoods, making them more vulnerable to attack. U.S. forces suffered their highest number of casualties in 2007.