BAGHDAD,  (Reuters) – Hours after U.S. troops handed  over full control of Iraq’s cities to its domestic security  forces, a car bomb in the northern city of Kirkuk killed at  least 30 people yesterday, police said.

The blast tore through a busy market in a largely Kurdish  part of the city, which is seen as a potential flashpoint  between ethnic Kurds, Arabs and Turkmens. Police said at least  45 people were wounded and the death toll could rise.

The U.S. pullback to rural bases from towns and cities is  the first step towards a full U.S. withdrawal by 2012 agreed  under a bilateral security pact.

Some Iraqis fear it leaves them open to attack by insurgent  groups but many Iraqis celebrated what the government named  “National Sovereignty Day”, more than six years after the  U.S.-led invasion to topple Saddam Hussein.

Citizens and Iraqi soldiers drove around the streets of the  capital in vehicles draped in flowers and Iraqi flags. Signs  were draped on Baghdad’s many concrete blast walls reading  “Iraq: my nation, my glory, my honour”.

“This day, which we consider a national celebration, is an  achievement made by all Iraqis,” Prime Minister Nuri al-Maliki  said in a televised address.