Officials said the attack took place at 7am in Sadr City, and involved a homemade bomb at a food stall where workers had gathered to have breakfast before going to work.
Meanwhile 15 corpses were discovered in the town of Musayeb, south of Baghdad, early on Saturday.
A defence ministry source said they showed signs of gunfire and torture.
Fourteen people died across the country in attacks on Friday, including a member of the Arab Socialist Party in Baquba who was shot in his car.
Cabinet announcement
Premier-designate Nuri al-Maliki has vowed he will present a government on Saturday, and Hassan al-Sunaid, a parliamentarian from his Dawa Party, said the cabinet is ready.
"The government will be announced tomorrow," a senior aide to Mr al-Maliki told Reuters on Friday.
The aide said parties have given themselves a week to reach a deal on the crucial posts for the interior and defence ministries.
Mr al-Maliki, who is a Shiite Islamist, will take charge of the Interior Ministry for the interim, and Vice-President Tareq al-Hashemi, a Sunni, look after the Defence Ministry.
The security portfolios are critical because of Iraq's raging insurgency and sectarian violence.
The agreement on how to best organise a grand coalition of Shiites, Sunnis and Kurds signals and end to months of political deadlock following the December election.
Sources told Reuters that the oil ministry position would be given to nuclear scientist and Shiite Islamist Hussain al-Shahristani. It is a significant portfolio as it represents the best possible way of lifting Iraqis out of poverty.
Also, since Thursday, political parties, especially the Sunni Iraqi Concord Front and the secular Iraqi National List of former premier Iyad Allawi, have objected to their allotment of ministries.
The United Iraqi Alliance will take at least 15 ministries, and the Concord and List look likely to garner around four each, according to AFP.
Most Sunni leaders remained in meetings on Friday, the Muslim weekly day of rest and prayer.
Talks that include US officials are expected to continue late into the night in a last-minute effort to come up with a cabinet by Saturday.
Mr al-Maliki, whose no-nonsense approach and inclusive discourse have won him grudging respect from rivals, faces huge challenges in tackling bloodshed and rebuilding the economy.
Many Iraqis complain that daily life has worsened since Saddam Hussein's ouster, with a dearth of jobs and frequent power and water cuts.
Four million people now live in extreme poverty, according to a UN-backed Iraqi study released this month.
More troops for Ramadi
The Sunni-dominated insurgency has meanwhile continued unabated with major clashes between rebels and US forces reported in both Fallujah and Ramadi, the two main cities of Iraq's western Al-Anbar province on Thursday.
Clashes in Ramadi continued on Friday with several shops set on fire.
The US military is reportedly sending more troops to Ramadi from other parts of Iraq to support those already battling insurgents, according to CNN.
There were also clashes between police commandos and insurgents in the western Al-Furat neighbourhood, leaving two commandos wounded and two insurgents dead, the interior ministry said.
Meanwhile, there is confusion over the fate of a United Arab Emirates diplomat kidnapped in Baghdad by a militant group, demanding the closure of the UAE embassy and of an Iraqi television station broadcasting from the Emirates.
Al-Arabiya television reported that Naji al-Nuami, snatched in the Iraqi capital on Tuesday, had been released, however a brother said he could not confirm the release.
Later, the UAE state news agency reported that the charge d'affaires in Baghdad had been called home to brief officials on the situation.