CCTV footage has revealed the moment a car bomb exploded on a busy street outside an ice cream parlour in Baghdad.

At least 17 people were killed and 32 wounded during the blast in the commercial Karrada area of the Iraqi capital, a largely Shia Muslim district.

The video, released by the Iraqi army, shows a queue of vehicles moving slowly through a downtown street shortly after midnight.

Seconds later a huge explosion lights up the road, sending a large amount of smoke and debris into the air.

The clip ends with drivers desperately trying to get their vehicles away from the blast site as flames rage at the side of the road.

Isis later claimed responsibility for the attack through its Amaq news agency.

Last week, the terrorist group called on its supporters to wage "all-out war on infidels" during the Ramadan period.

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During Ramadan, Muslim families break their fast after sunset and Baghdad's cafes are typically full of people eating into the night.

Just hours after the Karrada attack, a second car bomb exploded during morning rush hour in Shawaka district, killing nine people.