Some 20 more children were wounded, along with three US soldiers.

"A driver approached one of the US humvees and then detonated his car," said Sergeant David Abrams.

One eyewitness, Mohammed Ali Hamza, 25, said US forces turned up in the Al-Jedidah district to warn residents to stay indoors because of reports of a car bomb in the area.

"Children gathered round the Americans who were handing out sweets. Suddenly a suicide car bomber drove round from a side street and blew himself up," he added.

"I was at home. I heard the explosion. I rushed outside to find my son. I only found his bicycle," said Abu Hamed, whose 12-year-old son Mohammed was killed in the attack.

He was speaking at Kindi hospital where hundreds of distraught parents mingled in blood-soaked hallways shouting and screaming. He said he had found his son in the hospital morgue.

"I recognized him from his head. The rest of the body was completely burnt," he said.

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 as women at the hospital screamed and slapped their faces and beat themselves over the head.

"What sort of a resistance is this? It's a crime," he added.

The last major attack involving children was a triple car bomb on September 30 against US troops inaugurating a water treatment plant in western Baghdad which killed 43 people including 37 children who had gathered to take candy from the soldiers.

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 Tuesday. The men, who were accused of aiding the insurgents, were arrested by police commandos two days earlier, he added.

Their bodies were found dumped in the north of the city, he added and "all bore torture marks and bullet wounds to the back of the head."

Hussein Ali Kamal, deputy minister for intelligence at the interior ministry, told AFP it was not known who was responsible for the killings.