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A suicide blast killed both Turks and foreigners in the Sultanahmet district, next to the Blue Mosque. Most victims are German. At least 15 other people have been wounded.
The blast went off at around 10 AM in a park outside the historic Blue Mosque, leaving bodies strewn on the ground.
Turkish President Recep Tayyip Erdogan said following an emergency security meeting that the suspected suicide bomber was of "Syrian origin" without specifying whether the bombing was carried out by Daesh.
Prime Minister Ahmet Davutoglu later said he had telephoned German Chancellor Angela Merkel to tell her that most of the dead were German, the Anatolia news agency quoted his office as saying.
South Korean, Peruvian and Norwegian tourists could be among the wounded, according to several sources.
In recent months there have been sporadic attacks by a far-left group in Istanbul, while violence has soared between Turkish forces and PKK Kurdish militants, mainly in southeast Turkey, after a ceasefire broke down.
A bomb in Ankara in October was blamed by the government on Daesh.