A suicide bomber plowed a minibus into a crowd of several hundred job applicants waiting outside a police station Wednesday morning, detonating the vehicle in an explosion that killed at least 68 people and injured a similar number, officials said.

The attack in the tense city of Baqubah, about 35 miles northeast of Baghdad, was the deadliest in Iraq since the June 28 transfer of political power from U.S. to Iraqi authorities. Witnesses said the blast sent bodies and shrapnel flying through the air, charred a row of shops and apartments, burned several vehicles and left a large pool of blood where about 500 would-be police recruits had been waiting.

"I saw all those volunteers standing in line and I had a feeling something was about to happen, so I locked my shop and started to walk away," said Luay Gheidan, 35, whose grocery was next to the police station. "That's when the explosion happened. I saw smoke, people running everywhere, shrapnel falling and pieces of flesh. I don't know whom to blame, because no Muslim and no Iraqi could do such a thing."

Officials said that following the official transfer of power, extremists have been trying to sow chaos and intimidate Iraqi forces that are assuming increasing responsibility for protection of the country.

In a separate incident early Wednesday, seven Iraqi troops and 35 insurgents were killed in fierce fighting near Suwayrah, 20 miles southeast of Baghdad, U.S. military officials said. The clash resulted from a joint operation by U.S. and Ukrainian troops, who suffered no casualties. The officials said an additional 40 insurgents were taken into custody.

Polish Maj. Krzysztoz Plazuk, a coalition spokesman, said the insurgents had crossed into Iraq from Iran, the Associated Press reported. When asked whether the guerrillas were Iranian or Iraqi, Plazuk said he could not comment.

In another incident reported Wednesday, military officials said one U.S. soldier was killed and three others wounded Tuesday when a roadside bomb exploded in a town north of Baghdad.

U.S. military officials also said guerrillas attacked foreign troops in several locations in western Iraq, killing two foreign soldiers and forcing two aircraft to make emergency landings. It was not disclosed what country the dead soldiers were from.

And a radical group holding two Pakistani contractors hostage said Wednesday it had killed the men and freed their Iraqi driver, al-Jazeera television reported. The group, calling itself the Islamic Army in Iraq, announced in a video Monday that it had kidnapped two Pakistanis working for U.S. forces and sentenced them to death because their country was discussing sending troops to Iraq, the Associated Press reported.

Al-Jazeera said a new video showed the corpses of the two men; however, the network declined to show the footage.

The kidnapped Pakistanis have been identified by their government as engineer Raja Azad, 49, and driver Sajad Naeem, 29, both of whom worked for the Kuwait-based al-Tamimi group in Baghdad. The group said it had released their Iraqi driver, Omar Khaled Selman, after it was clear he had been duped by the Pakistanis.

The 9:30 a.m. car bombing in Baqubah was the 10th in Iraq since mid-May. More than 180 people have been killed by such blasts, which have been aimed at police stations and recruitment facilities for Iraqi security forces, as well as coalition military convoys and checkpoints. On May 17, a suicide bomber killed Izzedin Salim, who held the rotating presidency of the now-defunct Iraqi Governing Council.

The attack came three days before an important national conference is scheduled to be held in Baghdad to choose a legislative council for the interim government. The meeting of 1,000 delegates from across the country is to be convened under heavy security, with neither the location nor the delegates' names yet announced.

"The terrorists' goal is to hamper police work, terrorize our citizens and show that the government is unable to protect the Iraqi people," said Hamid Bayati, a deputy foreign minister. "This will not happen."

Secretary of State Colin L. Powell said the bombing was "once again an attempt by murderers to deny the Iraqi people their dream of a peaceful country that rests on a solid foundation of freedom." Speaking to reporters in Cairo, he added, "We have to condemn it; we have to fight it. We must not let these kinds of tragic incidents deter us from our goal."

The explosion tore through a street lined with people, vehicles and small buildings. Television footage showed men in shredded clothes screaming and running from the scene, a wounded man covered in blood sitting stunned amid burning wreckage and burned bodies being carried into ambulances.

The video also captured the hulks of several charred or flaming vehicles, including the white Korean-made minibus of the suicide bomber and a larger passenger bus that happened to be passing the police station.

Baqubah, located in the heartland of Sunni Muslim resistance to the U.S. presence in Iraq, has been the scene of many attacks by Iraqis against occupation forces and their Iraqi allies. But officials and witnesses said they believed that foreign or religious extremists were behind Wednesday's blast.

Police said the same station had been bombed six months ago. They said that before Wednesday's blast, they had tried to persuade applicants to wait on a side road away from the building as a safeguard, but that the eager men did not heed them and formed a large crowd in the open street.

"We told the volunteers not to stand directly in the street until we called them. We wanted to avoid such a thing happening again," said Lt. Sattar Abdullah of the Baqubah police patrol administration. He said he believed saboteurs from Iran were responsible for the attack, but no group has claimed responsibility for it.

Mohammed Saleh, whose apartment next to the station was badly burned, said the applicants were "standing around, buying cigarettes and eating sandwiches, when suddenly the bomb exploded." He noted that two shops destroyed in the blast had been selling alcohol, and he speculated that the attackers were Islamic fundamentalists who wanted to send a message against drinking as well as cooperating with the new Iraqi government.

At Baqubah General Hospital, where most of the injured were taken, a number of wounded applicants expressed both fury at the attackers and anger at the police for not giving them a safer place to wait.

"This strengthens my intention to apply again," said Uday Basim Mohammed, 26, who had just stepped out of the line of applicants to lock his car when the bomb detonated and sprayed him with shrapnel. "I came to protect my country, and I will not let these terrorists do these things again." He lay in a hospital bed, his head, a leg and a hand wrapped in bandages.

"These terrorists do not want Iraqis to live peacefully," he said. "They want to create chaos."

But another injured applicant, Qahtan Rageb, 26, said he would not return to apply for police work, even though he is poor and there are few other jobs available. "I want to live. I don't want to die," he said. "I will apply when the country is safe and people can live and work in peace."

Nearby, a third injured man, Mohammed Hussain, 23, lay with one eye covered in thick gauze.

"There were too many of us outside. They should have taken us to another place or at least divided us into smaller groups," he complained. "Now look at what has happened to me. I'm afraid I will never see again. Whoever did this is neither a patriot nor a Muslim."

Constable reported from Baghdad, Sebti from Baqubah.

An Iraqi soldier holds the hand of his brother, who was hospitalized after being injured in the Baqubah bombing.