NAJAF, Iraq (Reuters) -- A car bomb has exploded in Iraq's holy city of Al-Najaf, killing four Iranian pilgrims a day before a parliamentary election that Islamist insurgents have vowed to wreck with violence, officials said.
The blast gutted two tour buses parked near the Imam Ali shrine, which draws millions of Shi'ite faithful from Iraq and Iran each year. Salim Nema, an Al-Najaf health official, said the attack wounded 54 people, including 17 Iraqis and 37 Iranians.
At least 49 people have been killed in the last few days of campaigning, some of them soldiers and police voting early.
Sunday's election is a test for Iraq's young democracy, and will help determine whether Iraq can avoid relapsing into violence as U.S. forces prepare to withdraw by the end of 2011.
Prime Minister Nuri al-Maliki's bid to win a second term on a platform of providing services and security is under challenge from former Shi'ite partners and from a cross-sectarian, secularist group headed by former Prime Minister Iyad Allawi.
Insurgents have warned Iraqis, especially minority Sunni Arabs dominant under Saddam Hussein, to stay at home on March 7. Sunni Islamist militants say the vote will solidify power for the Shi'ite majority they see as heretical and incompetent.
The election is unfolding as global investors weigh opportunities in Iraq, which has the world's third largest oil reserves but is also desperate to diversify a shattered economy.
The blast in Al-Najaf, where officials hope religious tourism will fuel rebuilding and growth, blew out windows of nearby hotels and left a meter-wide crater in the pavement. Iranian women visiting when the bomb went off wailed nearby.
"These are Saddamists who hope to prevent transparent democracy in Iraq. Even if all Iranians here today had been martyred, we would still come to Al-Najaf," said Iranian pilgrim Ahmad Rafi.
No clear winner may emerge from the election, setting the scene for protracted negotiations to form a coalition government and perhaps making Iraq vulnerable to renewed violence.
Accustomed to bloodshed after seven years of violence, some Iraqis, such as shopkeeper Jabbar Radhi, struck a defiant tone.
"Nothing will shake us, not killings, not explosions."