SULAIMANIYA, Iraq (Reuters) - A suicide bomber blew himself up at a Kurdish funeral in the volatile and ethnically mixed province of Diyala in northern Iraq on Monday, killing 25 people and wounding 45, police said.
The bombing in the town of Jalawla, 115 km (70 miles) northeast of Baghdad, underscored the dangers Iraq still faces from militants, even as overall violence falls to levels not seen since mid-2003 and the United States prepares to withdraw combat troops by August 31, 2010.
Diyala is a melting pot of Kurds, Arabs and Turkmen variously professing Sunni, Shi'ite, Christian and other faiths.
Tensions between Arabs and Kurds in the province have been rising, driven by disputes over oil and territory between Iraq's Shi'ite Arab-led government in Baghdad and officials in the largely autonomous Kurdistan region.
Jalawla lies on the disputed border between Kurdistan and the rest of Iraq and was one of several towns that saw tense standoffs between Iraqi central government forces and Kurdish Peshmerga fighters last year.
By bombing a Kurdish event, the militants could be trying to spark ethnic conflict between Arabs and Kurds, just as Sunni Islamist militants from al Qaeda provoked a conflict between Sunnis and Shi'ite Arabs in 2006 and nearly tore Iraq apart.
"We heard a huge explosion. We looked over at our neighbour's house and there were dead people everywhere," said Suhad Ahmed, a housewife who lives next door to the house where the blast occurred.
"I saw a woman knocked down and killed in front of my eyes. We are shocked that anyone would want to target this family," she added.
Earlier on Monday a bomb at a west Baghdad bus terminal killed nine people and wounded 23, Iraqi police said. It was the second bomb attack this month in the predominantly Sunni Arab district of Abu Ghraib.
U.S. officials say the Iraqi police force and army, now stronger and more professional, have helped foil many bombing attempts but checkpoints cannot stop every bomber.
(Writing by Tim Cocks, Editing by Jonathan Wright)