The explosion happened in the city of Tacurong, on Mindanao island, some 950km (600 miles) south of Manila.

At least five people have been killed and 13 wounded, local media quoted police sources as saying.

Rebels have long been fighting for a separate Islamic state on Mindanao. The attack comes ahead of country-wide mid-term elections on 14 May.

"We're not sure whether this was the handiwork of terrorists or politically motivated because of the elections," Inspector Benjamin de los Santos, Tacurong's deputy police chief, told reporters.

He said no group had yet claimed responsibility for the attack.

US travel warning

The "improvised explosive device" is believed to have been left at a billiards hall in the city's busy public market, officials said.

Several people were seen covered in blood and lying on the ground following the blast, Mayor Lino Montilla said.

The attack comes two weeks after the US embassy warned against travel to Mindanao, saying it had intelligence of an imminent terror attack.

Philippine troops, with the help of US counter-terrorism trainers, have in recent months carried out extensive work on the island to track down Islamic militant groups.

The blast also comes six days before the Philippines holds national and local-level elections.

A surge in political violence since campaigning began in February has killed some 30 people.