About 60,000 troops are deployed to Thailand's restive south, where they are battling rebel groups [AFP]

A car-bomb explosion in Yala, a city in southern Thailand, has injured 18 people, including four soldiers, police say.

Sunday's blast started a large fire that swept through nearby shops.

Yala is the main city in one of three provinces near the border with Malaysia that have been under emergency rule since 2005.

"There was a bomb hidden in a fire extinguisher in a pick-up truck parked in front of a grocery shop near Siam City Bank," a local police officer said.

Of the casualties, four were seriously wounded, including three of the soldiers, authorities said.

Fighters in Thailand's south have waged a violent campaign since 2004, leaving more than 4,400 people dead in near-daily attacks.

Violence has intensified recently, with a bomb attack in Yala province killing nine villagers last month, and an attack on a military base a week earlier killing four soldiers.

Three people, including a teacher, were shot dead and their bodies burned in neighbouring Pattani province on Thursday.

On January 18, the Thai government extended emergency rule in the country's south for an additional three months, despite rights groups being concerned about the powers the law gives the military.

A security force of more than 60,000 is stationed in the region, battling the fighters.