7 killed in restaurant blast

"Seven people, including three policemen were killed and at least five other people were injured around 2:00 pm (1000 GMT) in an explosion at a restaurant near the courthouse in the centre of Baquba," Colonel Ismail Ibrahim told AFP.

He did not immediately know if the blast, which took out the back of the restaurant, was due to a bomb inside the establishment or to a booby-trapped car outside.

Earlier Sunni guerrillas took at least 80 people hostage in an Iraqi town near Baghdad on Friday and threatened to kill them unless Shias left the area, a Shia official quoted residents as saying.

The hostage-taking and three successive days of bombings which killed at least 34 people suggested insurgents had regrouped after a lull in violence since Jan. 30 elections.

"People from the town called me begging the Iraqi government to save their relatives who are hostages. They told me there are at least 60 hostages," the official, who asked not to be identified, told Reuters in Baghdad.

Iraqi Shias were fleeing the town of Al-Madain south of Baghdad yesterday following the hostage taking incident.

"Gunmen are going around with loudspeakers demanding that all Shias leave the town," said Captain Haitham Mohammed of the Iraqi army who fled Madain with several people on Friday evening to the city of Kut further south.

"They have detained more than 80 people, including women and children, and they are threatening to kill them unless Shias leave."

Mohammed said many Iraqi soldiers and police officers have changed into civilian clothing and have fled the mixed Sunni-Shia town on the Tigris river 30km south of the capital.

"Gunmen have ringed the town," said Khodeir Abbas, 72, who fled with 10 members of his family.

A distraught Abbas Mahmoud, 47, a labourer in Madain's market said: "I fled the town fearing they would kill me if I stayed."

Insurgents with heavy weapons appeared to have taken control of the mixed Sunni and Shia town of Madaen, just south of Baghdad, and no police or government forces were in sight, said the official.

"The residents told me the insurgents were wandering the streets in cars and warning people on loudspeakers that if Shias want the hostages to be safe they must leave town," he said.

Guerrillas have taken control of cities such as Falluja before but seizing many hostages in a town so close to the capital will pile pressure on Iraq's new leaders to deliver the improved security Iraqis have expected since the elections.