BAGHDAD - A suicide car bomber sent a fireball through a crowded market yesterday in the Shiite holy city of Kufa, killing at least 16 people and threatening to further stoke sectarian tensions in relatively peaceful areas south of Baghdad.

Kufa is a stronghold of the Mahdi Army militia, which is loyal to radical Shiite cleric Muqtada al-Sadr. U.S. officials have expressed fears that Sunni insurgents led by al Qaeda are picking their targets to provoke retaliatory violence to derail efforts to stabilize the country.

The blast sent flames through a nearby two-story kebab restaurant, charring the interior. Angry residents demanded better protection and accused authorities of fortifying their own homes and offices at the expense of the public.

"They do not care about the fate of the poor. We demand real, effective security measures to protect us," said 29-year-old Laith Hussein, who helped carry some of the wounded from Kufa to a hospital in neighboring Najaf.

The predominantly Shiite southern areas have seen a spike in violence and unrest, blamed in part on militants who have fled a security crackdown in Baghdad. The U.S.-led offensive is intended to curb violence and allow the Shiite-led government some breathing room to implement reforms, including proposals to empower minority Sunni Arabs and help end the insurgency. There has been little evidence, though, of any movement toward those reforms.

At least 68 people were killed or found dead nationwide yesterday, more than half of them apparent victims of so-called sectarian death squads usually run by the Shiite militias. Twenty-five of the bullet-riddled bodies were found in Baghdad, all but five on the predominantly Sunni western side of the Tigris River where sectarian violence appears to be on the rise.

A roadside bomb also killed two U.S. soldiers and wounded another southeast of Baghdad, the military said. In Washington yesterday, the Pentagon alerted more than 35,000 Army soldiers that they could be sent to Iraq this fall. In Congress, Democrats pushed a new plan to limit war funding.

Residents in Baqouba, a volatile city northeast of Baghdad, claimed that a U.S. helicopter opened fire on an elementary school, killing seven students and wounding three. A U.S. spokesman said the military was investigating the reports.

People ran through the corridors searching for their relatives at the Furat al-Awsat hospital in Najaf. Women in black abayas, traditional Islamic cloaks, pounded their chests and faces in grief.

"We are poor people looking for anything to secure our livelihood and we have nothing to do with politics. Why do they do this to us?" asked Firas Abdul-Karim, a wounded 23-year-old day laborer. *