KARACHI — At least 16 people were killed and more than 30 wounded in a blast at a gambling den in Pakistan's southern port city of Karachi late Thursday, senior police and government officials said.

The explosion ripped through the city's biggest gambling complex, known as the Rummy Club, senior government official Sharfuddin Memon told AFP.

"It was a home-made bomb placed in a packet inside the club," he said.

The violence came just a few hours after Pakistan's army had vowed to defeat terrorism and rejected the notion of Islamabad "not doing enough" to combat militants.

Local police chief Iqbal Mehmood said: "We are investigating if it was an act of terrorism or the result of some internal rivalry."

"It could be the result of gang war which frequently erupts between criminal groups in Karachi."

The complex, located in the impoverished Ghasmandi neighbourhood in the south of the city and visited by hundreds of people daily, was badly damaged, an AFP correspondent saw. The main hall was littered with slippers, shoes and playing cards.

Police and paramilitary groups had cordoned off the area and ambulances shifted the casualties to hospitals across the city.

"We received 15 bodies and one more died of his injuries later in the hospital," Mohammed Hashim, a doctor at the casualty ward of one of city's main hospitals, told AFP.

"Nearly 40 people were wounded", he said. "Seven of them are in a critical condition. The dead include young and old people."

Karachi is Pakistan's economic hub, home to its stock exchange and a lifeline for a depressed economy wilting under inflation and stagnating foreign investment.

But the teeming city, with a population of 16 million, is plagued by ethnic and sectarian killings, crime and kidnappings.

Karachi is also politically tense and steeped in rivalries between the Urdu-speaking majority and an influx of ethnic Pashtuns from the northwest, which has been hit by Taliban insurgency.

Outbreaks of political violence killed more than 150 people last year and extremists targeted Shiite and Sufi religious gatherings, although attacks on government security forces in Karachi have been rare.

More than 40 people were killed over 18 days in March, officials said, amid heightened tensions between the Muttahida Qaumi Movement (MQM), which represents Urdu-speakers originally from India, and the Awami National Party (ANP), backed by Pashto-speakers.

The MQM and the ANP are partners in the Pakistan People's Party-led coalition that rules the southern province of Sindh, of which Karachi is the capital.

Earlier Thursday Pakistan's army chief General Ashfaq Kayani "strongly rejected negative propaganda of Pakistan not doing enough and Pakistan army?s lack of clarity on the way forward," the military said in a statement.

Kayani said that the "army?s ongoing operations are a testimony of our national resolve to defeat terrorism", according to the statement.

His comments followed remarks by visiting Admiral Mike Mullen, Chairman of the US Joint Chiefs of Staff, accusing Pakistan's Inter-Services Intelligence (ISI) agency of having ties with Afghan Taliban in Pakistan's northwest tribal belt.

The army chief "strongly rejected negative propaganda of Pakistan not doing enough and Pakistan army?s lack of clarity on the way forward," the military said in a statement, a day after Mullen met top generals in Islamabad.

In the latest of a series of recent attacks Taliban militants in the tribal belt Thursday killed a truck driver and his helper to punish them for supplying cattle to neighbouring Afghanistan, officials said.

Around 20 insurgents armed with automatic weapons opened fire on three trucks soon after they entered the Baizai district of Mohmand tribal region after dropping supplies across the border in east Afghanistan, local administration official Maqsood Hasan told AFP.