The blast occurred a day after Pakistan's government banned the Baluch Liberation Army (BLA) and listed the shadowy group as a "terrorist" organisation.

The BLA is fighting, along with ethnic Baluch tribal fighters, for more autonomy for the mineral-rich province, home to Pakistan's largest gas fields.

The explosion damaged adjacent shops in the main market of Kohlu, Nasim Lehri, a senior official said from the town, about 450km east of the provincial capital, Quetta.

Lehri said several of the wounded were in serious condition.

The security situation worsened in December after a rocket attack during a visit by Pervez Musharraf, the president, to Kohlu.

No group has acknowledged responsibility for Monday's bomb attack, but officials suspected the rebels.

Militants have been fighting for more autonomy and control over Baluchistan's oil and gas resources for decades, but they intensified their campaign over the past year.

Baluchs complain of a lack of political representation and resent their resources being used to benefit Pakistan's other regions, most notably the populous Punjab province.