A car bomb has killed 120 people and injured at least 170 at a busy market in an Iraqi town, according to officials.

The attack happened in the predominantly Shia town of Khan Bani Saad, about 35km north of the capital Baghdad.

Children were among those dead in the explosion, which came as people celebrated the end of the Muslim holy month of Ramadan.

The Islamic State, which control swathes of the country, has said it was behind the attack in a post on Twitter.

The Islamist terror group said it had targeted a gathering of Shiite militias in the town, which is in Diyala province. Most of the residents are Shiites.

A statement from the group said one of its members drove three tonnes of explosives into a crowd.

Police major Ahmed al-Tamimi told Reuters the damage was “devastating”.

The attack is one of the deadliest in recent months in Iraq.

Hundreds of people were shopping at the main outdoor market as they readied for Eid al-Fitr, a joyous Muslim holiday that marks the end of Ramadan. Saturday is the first day of Eid for Shiites.

Videos posted on social media show a large swath of fire at the scene, with bodies and debris over a wide area. Several multistory buildings appeared to have been heavily damaged by the blast.

Poison gas

Separately, Islamic State used poison gas in attacks against Kurdish-controlled areas of northeastern Syria in late June, according to a Syrian Kurdish militia and a group monitoring the Syrian conflict.

The Syrian Kurdish YPG militia said Islamic State had fired “makeshift chemical projectiles” on June 28th at a YPG-controlled area of the city of Hasaka, and at YPG positions south of the town of Tel Brak to the northeast of Hasaka city.

It was the first Islamic State attack of its kind against the YPG, said Redur Xelil, spokesman for the militia.

The type of chemical used had not been definitively determined, he said. None of the YPG fighters exposed to the gas had died because they were quickly taken to hospital.

The White House said it was aware of the reports of chemical weapons use and was seeking additional information.

“We continue to monitor these reports closely,” Alistair Baskey, a spokesman for the White House National Security Council, said in a statement.

The YPG has emerged as an important partner for the US-led campaign against Islamic State. Backed by US-led air strikes, the YPG has seized wide areas of northern Syria from Islamic State this year.

The Syrian Observatory for Human Rights, a UK-based group that reports on the war using an activist network on the ground, said it had also documented the use of poison gas by Islamic State in an attack on a village near Tel Brak on June 28th.

Agencies