The attack in Kismayo's market was followed by a brief gunfight as the Ethiopians fought back against their attackers.
 
Mohamed Abdi, Kismayo's police chief, said 36 people were arrested and were being interrogated.
 
The gunfight was the first against Ethiopians in Kismayo, but the latest in a spate of attacks against Ethiopian and government troops across the country - most of them in the capital Mogadishu.
 
The Islamic Courts Union - the militia that controlled much of Somalia before being ousted by the Somali government and their Ethiopian allies in December - have said they will continue to fight against government forces.
 
The Ethiopians pulled out at least 200 soldiers on Tuesday as part of a scaling down of forces to make way for an African Union-backed peacekeeping contingent of nearly 8,000 troops.