An LBO reporter at the Colombo south hospital in Kalubowila said eight dead bodies had been brought to the hospital.
Friday's blast is the latest in a series of deadly explosions blamed on Tamil Tiger guerillas targeting civilians in the south of the island.
The blast came as the military said it gained control of an area in the Northwestern Mannar area and the guerillas beat back an offensive in the northern Jaffna peninsular with heavy casualties.
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