Security measures are being tightened in the area near Iraq’s central bank where at least 26 people were killed and 60 wounded, when gunmen detonated at least one bomb outside the bank and battled with security forces in what officials said could have been an attempt to raid the vaults.

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The attack occurred as bank employees were leaving work, sending a thick plume of smoke over Baghdad after the bank’s generator was set ablaze.

Security sources have given conflicting accounts of what actually happened, and some said the attackers had been disguised in military uniforms – a tactic not uncommon in Iraq.

Soldiers and police locked down Baghdad’s main arteries, with the capital on high alert for today’s first session of Iraq’s new parliament after a March election that has yet to yield a government.

Troops came under fire from gunmen as they surrounded the bank in case the initial bombing was part of a plan to plunder stockpiles of Iraqi dinars and U.S. dollars, said Baghdad security spokesman, Major General Qassim al-Moussawi.

Moussawi told state television there were four suicide bombers and three gunmen, all of whom were killed. One Interior Ministry source said dozens of attackers in military uniforms were involved and most escaped.

A central bank official, who asked not to be identified, said security forces had ordered all employees and civilians to stay inside while helicopters hovered over the site.

The attackers did not gain entry to the central bank’s main building but were driven to the rooftops of neighbouring buildings within its fortified compound, the bank official said.

Election tensions

There has been a spurt of deadly gold market robberies and attacks by suspected Sunni Islamist insurgents in recent weeks as tensions simmer following the inconclusive March election.

Many of the groups that took up arms after the 2003 US-led invasion to topple Saddam Hussein have turned to crime as the sectarian war and al Qaeda-led insurgency fade.

Gunmen killed 14 people on May 25 in a raid on Baghdad goldsmiths and three on June 9 in an attack on a gold market in southern Basra.

Overall violence in Iraq has fallen sharply since the height of sectarian bloodshed in 2006/07. But Sunni Islamist insurgents have sought to exploit the political uncertainty that followed the March 7 election through bombings and assassinations.

The number of civilians killed in violence each month has climbed slowly but steadily since the March vote.

A cross-sectarian alliance heavily backed by the once dominant Sunni minority won the most seats, but the main Shi’ite factions have agreed to form the largest unified bloc in parliament, potentially giving them the muscle to claim the right to form a government.

It is likely to still take weeks if not months for a deal on a government, potentially leaving Iraq rudderless as the US military ends combat operations in August ahead of a full troop withdrawal by the end of 2011.