German Doria, the regional police chief, said that the crude bomb was left on the side of a road near a crowded lottery outlet in the market.

   

Doria said they were checking reports of a second bomb at a nearby grocery store.

   

Western governments had given warning that armed groups might bomb a summit of the Association of South East Asian Nations and a wider meeting of East Asian leaders from January 13 to 15 in the central Philippines or attack cities in the south.

   

Manila, which holds the rotating chairmanship of Asean, had postponed the original summit last month, ostensibly due to a typhoon but days after the Australian, US and British embassies said that terrorists would try to disrupt it.

 

High alert

   

Philippine police said there was no specific threat in the central island of Cebu, guarded by about 13,000 police and soldiers, but put the entire country on high alert.

   

Doria said the bombing may have been retaliation by local Muslim group Abu Sayyaf for recent military killings of some of its senior members.

   

He also said Abu Sayyaf may have planted the bomb to divert the military from flushing them out of the remote southwestern island of Jolo.

 

At least 7,000 soldiers and some US military advisers are on Jolo, a sprawling, mountainous island, to combat Abu Sayyaf.