* Explosions hit crowded street in Shi'ite district
* U.S. troops set to depart by year-end (Adds details, quotes, background)
BAGHDAD, Oct 27 (Reuters) - Two bombs exploded on a busy commercial street in a Shi'ite neighbourhood in northeastern Baghdad on Thursday, killing at least 18 people and wounding more than three dozen others, police and hospital sources said.
The blasts hit the Ur district near the Iraqi capital's teeming Sadr City slum, scattering bodies through the streets and underscoring Iraq's fragile security situation as U.S. troops prepare to withdraw by year's end.
"We have 18 dead and 38 wounded, so far," a police lieutenant who identified himself only as Ahmed said at a local hospital where the wounded were being treated.
The Iraqi capital has been hit by a series of attacks in recent days, many aimed at security forces as militants try to undermine Iraq's fragile coalition government while U.S. forces pull out, more than eight years after the 2003 invasion that ousted Saddam Hussein.
Earlier on Thursday a sniper shot and killed a traffic policeman and wounded another in the capital's southern Saidiya district, while a roadside bomb blew up near a traffic police patrol in the northeastern Sadr City district, wounding two police and a civilian, police and medical sources said.
Roadside bombs exploded near two army patrols in Baghdad on Thursday, wounding eight civilians, the sources said.
On Monday militants struck police in at least four areas of Baghdad, killing five people, including two policemen, and wounding about 30 others.
Security sources said two roadside bombs targeted police in the Ur district on Thursday in a street lined with restaurants, clothing stores and other shops near Sabah al-Khayat Square.
The first killed a police officer and wounded three others. When people rushed to the scene, the second detonated, killing 17 people, including three soldiers, and wounding at least 33 people, police, hospital and army sources said.
Haider Jabar, a barber, was standing outside his shop when the first blast hit. He said police tried to hold back a gathering crowd.
"A short time later the second explosion happened and it was very powerful," he said. "Because of it, the windows of my shop were broken. The bodies were spread on the street and I took a policeman to the hospital. His arm was cut off."
Violence has fallen sharply in recent years following the sectarian slaughter of 2006-07, but Iraqi security forces are still fighting a lethal Sunni insurgency and Shi'ite militias that carry out scores of bombings and other attacks each month.
Military leaders have expressed concerns that militants might ramp up attacks as the 39,000 U.S. troops in Iraq pack up to leave. U.S. President Barack Obama said on Friday all U.S. forces would leave Iraq at the end of the year as scheduled. (Reporting by Kareem Raheem; Writing by Jim Loney; Editing by Louise Ireland)