(Updates toll, adds details)

BAGHDAD, Jan 17 (Reuters) - A suicide bomber wearing a vest packed with explosives killed eight people near a Shi'ite mosque in the volatile Iraqi city of Baquba on Thursday, police said.

Another 14 people were wounded in the attack as worshippers gathered to observe Ashura, one of the holiest events on the Shi'ite religious calendar, in the Shifta neighbourhood of southwest Baquba, 65 km (40 miles) north of Baghdad.

Baquba is the capital of Diyala province, where the U.S. military and Iraqi forces are concentrating their fight against Sunni Islamist al Qaeda and other insurgents who were pushed out of Baghdad and western Anbar province.

Iraqi security forces have launched a major operation to protect pilgrims attending Ashura, one of the world's largest religious gatherings, mainly in the holy Shi'ite city of Kerbala south of Baghdad.

Vehicle curfews have been imposed in southern provinces as well as in Baghdad and Diyala to protect Shi'ites observing Ashura, which commemorates the death of the Prophet Mohammed's grandson in battle in Kerbala 1,300 years ago.

Suspected al Qaeda suicide bombers and mortar attacks killed 171 people during Ashura in Kerbala and Baghdad in 2004.

The U.S. military this month launched a new offensive aimed at driving al Qaeda out of religiously mixed Diyala, part of a wider operation in provinces north of Baghdad and the capital's southern outskirts where Sunni Arab militants have regrouped.

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