(Adds al Qaeda suspects killed)

By Alaa Shahine

BAGHDAD, Dec 8 (Reuters) - Al Qaeda is changing tactics in Iraq's volatile Diyala province, the commander of U.S. forces in north Iraq said on Saturday, shortly after a suicide car bomb killed eight people in a northern oil refining town.

Major-General Mark Hertling said al Qaeda fighters driven out of other areas were targeting Diyala using suicide vests and attacking neighbourhood police units. But a spate of attacks there did not reflect a wider surge in violence, he said.

North of Diyala, police said at least eight people were killed in what a Reuters witness said was a suicide car bomb attack in the oil refining city of Baiji in the latest bombing.

The U.S. military also said its soldiers had killed 12 suspected al Qaeda gunmen and detained 13 others in operations north and south of the capital.

Religiously and ethnically mixed Diyala has become one of the epicentres of violence in Iraq after Sunni Islamist al Qaeda and other fighters were squeezed out of western Anbar province, Baghdad and other areas by security crackdowns this year.

At least 61 people have been killed and 90 wounded over the past week in five major bombing and shooting attacks in the province, which spans the Tigris and Diyala Rivers and spreads east to the Iranian border.

"As far as an upsurge in attacks, we have not seen that," Hertling told Reuters in an e-mail.

"What we have seen is some instances of different types of attacks," he said, referring to the use of suicide vests and "desperate" attacks against neighbourhood police units which the military calls "concerned local citizens".

On Friday, a woman wearing a vest packed with explosives killed 16 people in the Diyala town of Muqdadiya. The attack targeted former Sunni Islamist insurgents who had joined security forces to fight al Qaeda, a rare attack by a female suicide bomber.

About 10 Iraqi troops were killed in another attack north of Muqdadiya later on Friday, security officials said.

Violence across Iraq has fallen by 55 percent since an additional 30,000 U.S. troops became fully deployed in mid-June.

INDISCRIMINATE KILLINGS

The growing use of the concerned local citizens' groups, pioneered in Anbar province last year by Sunni Arab tribal sheikhs tired of al Qaeda's indiscriminate killings, have also been credited for sharp falls in violence.

"Additionally, because of reduced attacks in other areas, the attacks in Diyala province may appear to be more than what existed in the past," Hertling said.

"But the bottom line is that (al Qaeda in Iraq) and other extremists continue to try and affect the security situation in Diyala province ... Coalition forces and Iraqi security forces ... will continue to pursue them there and in the other northern provinces," he said.

U.S. forces commander General David Petraeus has said that al Qaeda remained a formidable enemy that would continue to try and mount large-scale attacks.

An al Qaeda-linked militant group issued a threat earlier this week vowing a wave of car bomb attacks and strikes against Iraqi security forces.

In Baiji, 180 km (110 miles) north of Baghdad, 40 people were also wounded in an attack witnesses blamed on a suicide car bomb at the home of an anti-terrorism official.

A Reuters television cameraman said at least 11 cars were destroyed and 15 houses damaged by the blast.

Most of the victims were neighbours in houses that were also damaged. The counter-terrorism official, Colonel Ali Shaker, was among the wounded, the cameraman said.

In the town of Yusufiya south of Baghdad, U.S. forces killed 10 suspects in an operation targeting a suspected associate of an al Qaeda leader, the military said. Two more were killed in northern Mosul and in the town of Jalawlah in Diyala's north.

In southern Iraq, a local leader of anti-American Shi'ite cleric Moqtada al-Sadr's movement was killed, along with his wife and two children, in an explosion at his home which police said could have been caused by a bomb. (Writing by Paul Tait; Editing by Charles Dick)

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