An attack on the same complex in July killed two people

"We reached a conclusion that it was due to some internal business rift," said provincial police chief Syed Kamal Shah quoted by Associated Press.

Police said the blast was caused by an explosive device hidden in a rubbish bin, causing damage to the building but not hurting anyone.

Following the blast, the cricket authorities in South Africa announced their team was pulling out of a tour of Pakistan due to begin next week because of security concerns.

The blast struck the 10th floor of the 12-storey Crown Plaza complex, where another bomb exploded in July, killing two people.

Terrorists target human lives, not commercial interests of an individual Police chief Syed Kamal Shah

Police cordoned off the area after the blast. Windows were shattered and debris rained on to the street below.

A large cloud of smoke was seen from the site of the explosion, which took place at 2030 local time in a business district in the east of the city when most of the offices were closed.

"Terrorists target human lives, not commercial interests of an individual, and in this case only commercial interests of the owner were the target," Mr Shah said.

'Al-Qaeda' arrests

In a separate development, Pakistan security officials announced the arrest of 15 Malaysian and Indonesian students in Karachi on Saturday for alleged "involvement in activities which are against the interests of Pakistan".

A senior Karachi-based security official, quoted by AFP, said four of those arrested were suspected activists in Osama Bin Laden's al-Qaeda organisation.

Karachi has witnessed a series of bloody attacks against Western targets in recent years, blamed on Islamic militants angered by Pakistan's support for Washington's "war on terror" after the 11 September 2001 attacks.

A suicide bomber detonated a car packed with explosives outside the Karachi Sheraton Hotel in May 2002, killing 11 French naval engineers and three Pakistanis.

Twelve people died the following month when a car bomb exploded outside the US consulate in Karachi.

In the July explosion at Crown Plaza, a security guard and a passer-by were killed and about four other people injured by flying glass. Police say the two blasts at the complex may be related.

Crown Plaza mainly houses the offices of property agents and construction companies, as well as several foreign firms.

Karachi, which has a population of 14 million, also has a long history of sectarian, ethnic and political violence that has killed about 4,000 people in the past five years.