In one of the worst attacks since Prime Minister Haider al-Abadi took office last summer, a truck laden with explosives blew up at a crowded marketplace in Baghdad's Sadr City. (Reuters)

The deadliest blast to strike Baghdad in nearly two years tore through a busy market Thursday, killing at least 60 people in an attack claimed by the Islamic State as efforts to turn back the militants on the battlefield stagnate.

The carnage from a bomb-packed refrigerated truck in the Shiite neighborhood of Sadr City highlighted the Islamic State’s ability to continue to wreak havoc in Iraq’s seat of power.

Residents scrambled to rescue survivors from the twisted wreckage in the Jamila market, which was packed with early-morning traders buying wholesale supplies for their stores.

Despite a year-long U.S.-led bombing campaign against the Islamic State — and the presence of nearly 3,000 American troops advising and training Iraqi forces — Iraq has struggled to retake territory from the extremists.

Gen. Ray Odierno, the U.S. Army chief of staff, gave a bleak assessment of the battle against the militants, describing it as a “kind of stalemate” in a final Pentagon news conference Wednesday before his retirement.

A counteroffensive for the western city of Ramadi, first announced in late May, has made limited progress, stalling on the outskirts of the city. Ground ­forces have been held up by hundreds of roadside bombs, while ­bridges into the city have been destroyed. Meanwhile, Shiite militia ­forces, which have done the bulk of the fighting elsewhere, have been excluded from the operation.

Odierno said the Islamic State militants have been “blunted somewhat,” but he added that the Pentagon should consider embedding soldiers with Iraqi forces­ unless progress is made.

As the battle drags on, Shiite neighborhoods in Baghdad such as Sadr City are paying a heavy cost. Many young Shiites are fighting — and dying — for the security forces­ and Shiite militias, while they also face bombing attacks at home. The impoverished neighborhood in northeastern Baghdad is a frequent target for suicide and car bombings by the Sunni-led Islamic State, a radical al-Qaeda offshoot also known as ISIS­ and ­ISIL.

The instability in Iraq has emerged as a topic of contention in the U.S. presidential campaign. Former Florida governor Jeb Bush, a contender for the GOP nomination, sought to blame Democratic front-runner Hillary Rodham Clinton for the turmoil in Iraq in a Tuesday night speech, charging that she and President Obama engineered the “premature withdrawal” of U.S. forces from Iraq in 2011 when she was secretary of state. He said this created “the void that ISIS­ moved in to fill.”

Jake Sullivan, a former State Department official and the Clinton campaign’s lead foreign policy adviser, called Bush’s remarks “a pretty bold attempt to rewrite history and reassign responsibility.” The withdrawal of U.S. combat forces from Iraq was required under an agreement signed in 2008 by Bush’s brother, President George W. Bush, and Obama implemented the agreement when the Iraqi government balked at terms for leaving in place a residual U.S. force. The Islamic State evolved from a group called al-Qaeda in Iraq, which joined an insurgency against U.S. and Iraqi government forces­ in 2004.

In its assertion of responsibility for Thursday’s blast, the Islamic State described Sadr City as one of the “strongholds” of the Shiite militias it is fighting, and it warned of more attacks ahead.

People remove a body from a market in Baghdad’s Sadr City neighborhood on Thursday after a massive truck bomb blast claimed by the Islamic State. (Karim Kadim/AP)

“What is coming is worse and more bitter,” the group said. It claimed that nearly 90 people were killed and 200 injured but provided no evidence to back up the figures.

State Department spokesman John Kirby condemned the attack. “The United States continues to stand shoulder to shoulder with the Iraqi people as they confront ISIL and the violence it represents,” Kirby said in a statement Thursday.

The force of the blast ripped off the metal shelters over stalls in the covered market. Video showed the dead and injured being carried from the debris over vegetables strewn on the ground.

“At the site, you couldn’t distinguish between human flesh and the meat people were selling,” said Radhi al-Saidi, a shopkeeper in the market who said two of his workers were killed.

He said the truck was known among market workers and brought tomatoes to sell every week. It had been parked the night before, he said.

Hakim al-Zamili, the head of parliament’s defense and security committee, said 60 people were killed and 17 remained missing. He described it as the biggest bomb attack ever carried out on the neighborhood.

Haider Fadl, a local council member, put the death toll at more than 60 and said the wounded numbered in the hundreds. The Associated Press, citing police sources, reported that at least 67 were killed.

The death toll was the highest in Baghdad since twin bombings targeted a Shiite funeral and a nearby area in September 2013, killing at least 72 people.

“It’s the most busy hour for the market, when the businessmen come to buy vegetables to sell in their shops,” Fadl said. “People lost many loved ones. Their jobs and their shops have been destroyed. They are very angry.”

A similar attack on a market in Iraq’s eastern Diyala province last month killed more than 120 people. The Islamic State also asserted that it carried out a suicide car bombing Monday in Baqubah, about 35 miles northeast of Baghdad, that killed more than 30 people.

“We are losing martyrs on the front lines, but also at home we have these attacks on our city,” Fadl said.

The bombing is a blow to Prime Minister Haider al-Abadi, who was enjoying a popularity boost after announcing a sweeping crackdown on corruption and excessive government spending.

“What has the government provided for the people?” asked one unidentified resident interviewed by the Sharqiya news channel. “Only destruction, killing and kidnapping.”

Another chimed in that corruption in the security forces­ meant that anyone who paid 25,000 Iraqi dinars ($22) could bribe their way through checkpoints without being searched.

While Abadi has pledged to build bridges­ with Iraq’s Sunni community — an effort that the United States sees as a crucial step to chip away support for the Islamic State — Sunnis in Iraq still complain of mistrust and marginalization at the hands of the Shiite-led government.

Odierno, who served as the most senior U.S. commander in Iraq in 2008 to 2010, gave a pessimistic outlook for the future of the country. On reconciliation between Sunnis and Shiites, he told reporters at the Pentagon that partition “might be the only solution,” although he added that he was “not ready to say that yet.”

That drew a swift rebuke from Abadi, whose office released a statement expressing “surprise” at the remark, which it described as “irresponsible.”

“Iraqis are making sacrifices in order to strengthen the unity of their country and defend it,” the statement said.

In Washington, State Department spokesman Mike Lavallee declined to comment specifically on Odierno’s remarks but said the United States supports Abadi’s effort to create a more-inclusive environment in Iraq.

“As we have said many times, the United States believes a unified Iraq is a stronger Iraq,” Lavallee said. “We also believe a unified Iraq is important to the stability of the region.”

Missy Ryan and William Branigin in Washington contributed to this report.

The Islamic State’s suspected inroads into America

What a year of Islamic State terror looks like

The hidden hand behind Islamic State? It’s Saddam Hussein’s