(Adds Pentagon on troops)

By Khaled Farhan

KUFA, Iraq, May 8 (Reuters) - A suicide bomber killed 16 people and wounded 70 at a crowded market in Iraq's Shi'ite city of Kufa on Tuesday, officials said, the latest in a string of sectarian attacks blamed on al Qaeda Sunni militants.

In a major step towards meeting power-sharing targets set by Washington for Baghdad, members of an Iraqi committee set up to reform the constitution said they hoped to submit proposals to parliament next week.

The announcement comes amid growing U.S. impatience at Shi'ite Prime Minister Nuri al-Maliki's progress on accords the United States says are key to easing Shi'ite-Sunni violence.

Leaders from the Sunni Arab minority, the backbone of the insurgency, have renewed threats to quit Maliki's government because they say their concerns are being ignored.

In Washington, the Pentagon said it had told another 35,000 U.S. soldiers they were in line to go to Iraq, a move that gives commanders enough forces to maintain a security crackdown there through at least the end of the year.

Pentagon spokesman Bryan Whitman said the decision was not related to the military's so-called troop "surge", which will bring the number of U.S. forces in Iraq to 160,000 once reinforcements are in place by June 1.

Witnesses said the bomber blew himself up in an open-air market packed with morning shoppers in central Kufa, near the holy Shi'ite city of Najaf, 160 km (100 miles) south of Baghdad.

"I saw the minibus coming through the crowds. There was one person driving. He tried to park the vehicle and then it exploded. There were many bodies," Mohan Ali told Reuters.

The blast ripped through a nearby restaurant, blowing out windows, knocking over tables and scattering body parts. In the wake of the explosion, angry protesters gathered at the site and chanted slogans against U.S. forces and government officials.

"At least five or six people were killed inside the restaurant. There are pools of blood on the floor," Ali al-Hamadani, the restaurant's owner, told Reuters.

Medical officials said the blast killed 16 people and wounded 70. Provincial spokesman Ahmed Duaibi blamed al Qaeda.

Sunni Islamist al Qaeda, which U.S. and Iraqi officials accuse of trying to tip Iraq into full-scale civil war between majority Shi'ites and minority Sunni Arabs, has stepped up attacks in the southern Shi'ite heartland in recent weeks.

Last month, a suicide car bombing blamed on al Qaeda killed 60 people near one of Iraq's most revered Shi'ite Muslim shrines in Kerbala, also in the Shi'ite south.

President George W. Bush, fighting calls to set a timetable for a U.S. withdrawal from a war that has killed more than 3,300 troops, has said al Qaeda is "public enemy number one" in Iraq.

SECTARIAN MURDERS UP

Mass attacks on Shi'ite targets have raised fears that Shi'ite militias blamed for killing Sunni Arabs are re-emerging.

The U.S.-backed security crackdown in Baghdad sharply cut the number of sectarian murders in its first weeks, but the number of tortured and bullet-riddled bodies dumped in the capital is rising. Police found 30 bodies on Monday -- one of the highest totals since the plan took effect in February.

Kufa is a stronghold of fiery Shi'ite cleric Moqtada al-Sadr, who commands the feared Mehdi Army militia.

An official at Sunni Vice President Tareq al-Hashemi's office denied media reports that Hashemi had set a May 15 deadline for pulling his bloc out of government if amendments to the constitution had not been made by then. (Additional reporting by Ibon Villelabeitia and Waleed Ibrahim in Baghdad and Kristin Roberts in Washington)

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