BAGHDAD (Reuters) - A bomb in a bus killed three people and wounded 14 in Baghdad, hospital and police sources said on Tuesday, the latest attack to raise fears of a return to sectarian violence in Iraq.

The explosion occurred in Sadr City, a Shi'ite district in northeastern Baghdad, the sources said.

International mediator Kofi Annan is in a separate, heavily fortified part of the capital for talks with Iraqi Prime Minister Nuri al-Maliki on Syria.

Although violence in Iraq has eased since its peak in 2006-2007, last month at least 237 people were killed and 603 wounded in attacks, making it one of the bloodiest months since U.S. troops withdrew at the end of last year.

Sunni insurgents often attack Shi'ite targets to try to reignite sectarian violence that has killed tens of thousands.

(Reporting by Kareem Raheem; Writing by Sylvia Westall; Editing by Louise Ireland)