A bomb explosion at a lunar new year fair in Myanmar's southern Karen state has left seven people dead and 11 others injured, state media has reported.

According to the Myanma Ahlin newspaper, the bomb exploded on Wednesday evening in the town of Hpa-pun.

The paper said the blast occurred near food stalls set up for celebrations marking the local ethnic Karen minority's New Year holiday.

No-one has claimed responsibility for the blast, but the paper blamed the attack on fighters from the Karen National Union (KNU), which has been fighting for greater autonomy from military-ruled Myanmar for decades.

The report said officials had warned that the group might try to create panic by exploding more bombs and called on the public to report any suspicious activities to authorities.