It was the second attack of the day in Kandahar, where numerous strikes have occurred in recent weeks, after a large car bomb exploded near a hotel in the centre of the city.
Six people were wounded and vehicles and shops were destroyed in the blast, officials said.
The strikes come ahead of an expected major offensive by US and Nato troops in the restive region in the coming months.
In a different incident in the north, four German soldiers were killed and five others injured in Baghlan province when the group came under fire from opposition fighters.
The soldiers were reported to have come under rocket fire while close to the Pol-i-Khomri military camp, the German Defence Ministry, said.
It was the deadliest single attack for foreign troops in 2010.
US and Nato troops are in the country to secure it from Taliban and al-Qaeda fighters.
The forces are in the country after the US-led invasion in 2001 to remove the Taliban, whom they accused of harbouring al-Qaeda operatives, from power following the September 11 attacks on the US of the same year.