At least 10 people were killed when three bomb blasts rocked a busy market in Iraq's capital on Sunday where people were shopping for the Muslim festival of Eid al-Adha, police sources said.

The blasts occurred in Shurja, an important commercial district in central Baghdad where shop owners and vendors sell clothes, electronics, textiles, food and other goods.

I can see fire and black smoke rising and a large number of fire engines, ambulances and police patrols rushing to the market, a Reuters witness close to Shurja market said.

Police sources said 10 people had been killed in the attack and a source at Baghdad's central morgue said it had received 10 bodies. A source at al-Kindi hospital in Baghdad put the toll at eight killed and 26 wounded.

The reason behind the fire was sabotage. The perpetrators used gasoline to set ablaze the market, Major General Qassim al-Moussawi, a spokesman for Baghdad security operations, said.

Iraqi forces are preparing to take full responsibility for security by year-end when all U.S. troops pull out of the country, nearly nine years after the U.S.-led invasion.

Military leaders have expressed concerns that militants might ramp up attacks as the 33,000 U.S. troops left in Iraq pack up to leave.

Although violence has dropped since the peak of sectarian fighting in 2006-7, bombings and killings occur on a daily basis and a stubborn Sunni insurgency linked to al Qaeda and Shi'ite militias remain capable of carrying out lethal attacks.

The number of civilians killed in violence in Iraq climbed sharply in October following a string of suicide and roadside bombings in Baghdad. Attacks have also increased against Iraq's army and police.

(Additional reporting by Muhanad Mohammed; Writing by Serena Chaudhry; Editing by Rosalind Russell)