BAGHDAD—Iraq’s leader said his forces recaptured the strategic city of Tikrit from Islamic State, dealing the biggest setback to the militants since they began to seize large swaths of land in Iraq and Syria last year.

Prime Minister Haider al-Abadi said operations were still under way to clean out any remaining insurgents and booby traps. But his administration said that Iraqi forces had reached the center of Tikrit and raised the national flag atop a provincial headquarters.

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