A missile fired by U.S. forces at militants in east Baghdad overshot its target and hit a U.S. vehicle, wounding two soldiers and three civilians, the U.S. military said on Sunday.

In a statement, the U.S. military said it had observed four people placing roadside bombs in the district of New Baghdad on Saturday. An aircraft fired a Hellfire missile, killing two of them.

A second missile targeting the two survivors of the first strike "overshot", setting alight a U.S. military vehicle and nearby houses. The U.S. military said it was investigating the cause of the "misfire".

"(These) events are unfortunate and our apologies go out to those innocent civilians who were affected," Colonel Bill Buckner, a military spokesman, said in the statement.

Critics say U.S. forces often fire on militants without taking reasonable care to find out who else is in the area. The U.S. military says militants often deliberately use civilians as shields against its forces.

New Baghdad lies near the district of Sadr City, where U.S. and Iraqi forces have been battling Shi'ite militiamen loyal to anti-American cleric Moqtada al-Sadr for the past week.

Police said there appeared to have been little fighting in the slum overnight.