A twin suicide bombing claimed by Islamic State killed 70 people in a Shi'ite district of Baghdad on Sunday in the deadliest attack inside the capital this year, as militants launched an assault on its western outskirts, Reuters reports.

Police sources said the suicide bombers were riding motorcycles and blew themselves up in a crowded mobile phone market in Sadr City, wounding more than 100 people in addition to the dead.

Reuters says its witness saw pools of blood on the ground with slippers, shoes and mobile phones at the site of the blasts, which was sealed off to prevent further attacks.

In a statement circulated online, Islamic State said it was responsible for the blasts: "Our swords will not cease to cut off the heads of the rejectionist polytheists, wherever they are," it said, using derogatory terms for Shi'ite Muslims.

Prime Minister Haider al-Abadi said the attacks were in response to Islamic State's recent defeats: "This gang targeted civilians after it lost the initiative and its dregs fled the battlefield before our proud fighters," he said on his official Facebook page.

At dawn on Sunday, suicide bombers and gunmen attacked Iraqi security forces in Abu Ghraib, seizing positions in a grain silo and a cemetery, and killing at least 17 members of the security forces, officials said.

Footage circulated online by the Amaq news agency appeared to show Islamic State fighters crouching behind dirt berms and launching the attack with automatic rifles, machine guns and rocket-propelled grenades.

Reuters said it could not verify the video's authenticity.

Security forces had mostly regained control by Sunday evening but officials said there were still clashes. Baghdad-based security analyst Jasim al-Bahadli said the assault suggested it was premature to declare that Islamic State was losing the initiative in Iraq.