KABUL (Reuters) - A suicide bomber killed four people near the U.S. embassy in Kabul Thursday, underscoring Afghanistan’s deteriorating security, but a U.N. Security Council delegation said the situation was not out of control.

Violence in Afghanistan has reached its worst level this year since U.S. soldiers and their Afghan allies toppled the Taliban in 2001, raising doubts about international efforts to bring stability despite an increasing number of foreign troops.

The suicide car-bomber blew himself up as military convoy was passing on a road about 150 meters (yards) from a traffic junction with access to the U.S. embassy and the Health Ministry.

The presidential palace said four civilians were killed. Twenty people, all civilians, were wounded, a Health Ministry doctor said.

No one from the U.S. embassy was hurt, an embassy spokesman said. Most staff were off work for the U.S. Thanksgiving holiday.

Later, wrapping up a three-day visit, a delegation of U.N. Security Council ambassadors and envoys said while Afghanistan was going through a sensitive period, there were new grounds for “cautious optimism.”

“Afghanistan is facing a difficult security situation, but not a security crisis. We should avoid any inclination to disillusionment and frustration,” said Ambassador Giulio Terzi of Italy.

Terzi listed improving ties between Afghanistan and Pakistan, a recent Afghan cabinet reshuffle and significant drop in opium cultivation as the grounds for optimism.

The delegation met President Hamid Karzai and military commanders of NATO and U.S.-led forces in Afghanistan.

It is expected to publish its findings in coming days.

“POSITION OF STRENGTH”

Terzi said the delegation’s discussions had included the military situation in Afghanistan, where the al Qaeda-backed Taliban have made a come back since 2005, civilian casualties caused by foreign troops hunting militants, and human rights.

Other issues discussed were regional cooperation and the government’s reconciliation efforts with the Taliban, he said.

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With the spread of Taliban insurgency more than seven years since their overthrow and no sight of an end to the conflict, the possibility of talks with the insurgents is being considered by the government and its Western allies.

A tentative first step toward talks was taken in September when pro-government Afghan officials and former Taliban met in Saudi Arabia.

The Taliban derided the talks and have said repeatedly they would not enter negotiations as long as foreign troops remained.

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Nevertheless, the September meeting offered a glimmer of hope.

Terzi said any dialogue with the insurgents should be made from a position of strength and it should not ruin the democratic gains Afghanistan has achieved since 2001.

At the same time, he said Afghanistan’s problems could not be won militarily and there was need for political engagement and a focus on reconstruction efforts.

In another incident Thursday, an Australian special forces soldier was killed by a roadside bomb and two were wounded during an operation against insurgents, the Australian government said.

An alliance official in Kabul said the blast was in the southern province of Uruzgan. Australia has about 1,000 soldiers in Afghanistan, most in Uruzgan.