"The glass came flying. Everything else blew up. People were blown apart," said Basam Sarhan, a 25-year-old baker working in the kitchen at the back of the restaurant, located in an upscale Baghdad neighborhood.

It was not clear who was behind the explosion, which came despite tightened security in the capital over the holiday as military officials expected insurgent attacks. Two other bombs exploded earlier Wednesday near U.S. military convoys in the capital - one also a car bomb, the other an explosive hidden in bushes outside another restaurant.

After the evening explosion, sirens wailed and helicopters buzzed overhead as ambulances and U.S. soldiers converged on the Nabil restaurant, a popular spot with foreigners that advertised a New Year's Eve party with live music and belly dancing.

An American soldier leaned into the rubble after discovering a victim.

"She's got a pulse! She's got a pulse!" he screamed.

Several cars outside the restaurant were wrecked and in flames. Gunfire was heard after the explosion, which left a large crater on a side street near the building.

"There was an explosion. The glass came flying. Everything else blew up. People were blown apart," said Basam Sarhan, a 25-year-old baker. He had been working in the kitchen at the back of the restaurant, near where the bomb hit.

Sarhan said there were about 25 people in the restaurant at the time of the blast.

Five Iraqis were killed, according to Lt. Gen. Ahmed Kadhem, deputy Iraqi interior minister and Baghdad chief of police. The wounded included 32 Iraqis and several Westerners, police and hospital officials said.

The Los Angeles Times said three of its reporters and four local staff members suffered wounds that did not appear life-threatening. The reporters were Chris Kraul, a correspondent who most recently headed the Times' Mexico City bureau; Tracy Wilkinson, a Polk award winner and the paper's Rome bureau chief; and correspondent Ann Simmons, who formerly was the Times' bureau chief in Nairobi, Kenya.

Simmons is British and the two other Times reporters are U.S. citizens.

"The people who are carrying out such attacks do not discriminate about the place," said Police Brig. Hamid Alyasiry, who is in charge of Karrada, an upscale shopping and restaurant district where the blast occurred. "They want to frighten everyone to create terror."

A young boy who did not give his name told Associated Press Television News: "It was a car bomb. It went off in front of us. It was very powerful."

Blood streaming down his face, a man named Khalil said, "I don't know what it was, whether it was a rocket or a bomb. Why did they have to do it to us?"

One witness, Ahmed Hassanain, said a white Toyota Corolla car drove by the area five or six times before the bombing. The last time it passed, he said, the guard at the restaurant shot at it. It drove away. Two minutes later, there was an explosion. He said he did not know whether it was the Corolla that blew up.

"These people are terrorists," Hassanain said. "Nobody here supports them."

Outside the restaurant, a young man and a woman with blood on her face and shoulders wept and hugged each other. She said they were a family of six having New Year's dinner in the building next door when the blast ripped away the side wall. Her uncle was taken to a hospital, she said.

Mothafar Mounir, the restaurant manager, said he heard a big blast and then the ceiling caved in on a table where an Iraqi family was seated. He said a restaurant guard and two staff were among the injured.

The area of the blast is frequented by rich Iraqis who shop and visit restaurants, and is lined with chic shops selling items such as cosmetics, curtains and upholstery. There are many pharmacies and two-story houses. Three blocks from the restaurant, the windows of a big clothing shop were shattered.

The Nabil restaurant serves fine wine and other expensive alcoholic drinks - a rarity in Baghdad - and a menu of Western and Arabic dishes. The tables had red and white tablecloths, and it was dimly lit. Musicians played live Arabic music on an electronic keyboard and other instruments.

Inside Nabil, big round tables set for dinner were covered with food. A bottle of White Horse scotch was still standing but its neck was blown off.

U.S. soldiers and Iraqi police had stepped up security in Baghdad on Wednesday, erecting more razor wire and checkpoints in key areas. Military officials have reported the possibility of attacks by insurgents over the holiday period.

Earlier, a car bomb exploded as a U.S. convoy passed on a Baghdad street full of shops, destroying a Humvee, Iraqi police Sgt. Thabet Talib said. An 8-year-old Iraqi boy was killed and 21 other people were wounded, including five U.S. soldiers and five Iraqi civil defense personnel, authorities said.

Brig. Gen. Martin Dempsey, commander of the 1st Armored Division, said it was not clear what kind of bomb caused the blast.

Later in the evening, a bomb hidden in shrubs outside a separate restaurant in Baghdad exploded as a U.S. military convoy passed, wounding three American soldiers and three Iraqi civilians.

In other developments:

- A South Korean was killed in a gunbattle between Romanian soldiers and Iraqi insurgents near the southern city of Basra, South Korea's Yonhap news agency reported Wednesday. There was no immediate confirmation of the report or whether the victim was a soldier or a civilian.

- A U.S. soldier was killed and a second wounded in the accidental discharge of a weapon Tuesday night in the town of Tanf on the Syrian border, the military said.

- Gunfire erupted as hundreds of Iraqis marched in protest over fears of Kurdish domination in the oil-rich northern city of Kirkuk. Police said two people were killed.