The blast at the crowded Naurang Bazar caused panic on the streets as people rushed to help the wounded and emergency vehicles raced to the site. Visuals from the scene showed damaged shopfronts and a mangled vehicle.
The explosion follows a car bombing and ambush at a police post in the nearby Bannu district on Saturday that killed 15 police officers.
Pakistan blamed Afghanistan-based militants for the weekend attack and delivered a strong protest to Kabul. The Afghan Taliban government said on Tuesday that the allegations were "baseless".
