Two bombs exploded in a mainly Shi'ite Muslim area of Iraq's capital Baghdad on Thursday, killing at least 10 people and wounding 37, police and hospital sources said.

One bomb was planted on a parked motorcycle and the other was a roadside device, a police source said. The attacks occurred in the impoverished Sadr City neighbourhood in northeast Baghdad.

There was a group of day labourers gathered, waiting to be hired for work. Someone brought his small motorcycle and parked it nearby. A few minutes later it blew up, killed some people, wounded others and burned some cars, said a police officer at the scene, declining to be named.

A Reuters reporter said there were blood stains all around the site of the motorcycle bomb attack and that tarmac on the road had been ripped up by the explosion. Building tools and shoes were scattered across the site.

Police said they found and defused two other bombs.

Iraq is still plagued by a deadly Sunni Muslim insurgency and Shi'ite militias nearly nine years after the U.S.-led invasion that ousted Saddam Hussein.

Sadr City is a stronghold of radical Shi'ite cleric Moqtada al-Sadr, whose Mehdi militia once fought U.S. and Iraqi troops. He is now a key ally of Shi'ite Prime Minister Nuri al-Maliki.

A political crisis that erupted shortly after U.S. troops withdrew from Iraq on December 18 has revived concerns about sectarian strife in Iraq, which teetered on the brink of civil war in 2006-7.

Maliki angered rivals when he asked parliament to have his Sunni deputy Saleh al-Mutlaq removed and sought an arrest warrant for Iraq's Sunni Vice President Tareq al-Hashemi on charges he ran death squads.

On Tuesday, members of the Sunni-backed Iraqiya bloc boycotted Iraq's parliament and cabinet, accusing Maliki's bloc of governing alone in a power-sharing coalition that was supposed to ease sectarian tensions.

A spate of bombings that killed 72 people in mainly Shi'ite areas of Baghdad a few days after the political crisis began have only deepened the fears of rising sectarian tensions.

The inclusion of Iraqiya in the governing coalition was widely considered crucial to prevent a slide back into the kind of sectarian violence that was unleashed after the 2003 U.S.-led invasion. Thousands were killed in the violence.

Many Sunnis have complained of being sidelined in the political process since Saddam was ousted and the majority Shi'ites dominated the government.

(Writing by Serena Chaudhry; Editing by Ralph Gowling)