Explosion reported outside a mall in Cotabato, south Philippines

The explosion is reported to be a bomb outside South Seas Mall in Cotabato City

Two people were killed and at least 32 others wounded on December 31 after a bomb went off outside a shopping mall in the southern Philippine city of Cotabato, police said. AFP

Two people have been killed and many more wounded after a bomb exploded outside a mall in Cotabato City in the Philippines as people were making last-minute New Year's Eve preparations.

At least two people were killed and 32 wounded in the explosion, thought to be an improvised explosive device.

Photographs posted on social media, which could not be verified by The National, show debris littering the entrance to a mall, reported to be the South Seas Mall.

The explosion prompted officers to search the mall, leading to the discovery of another suspected bomb which they destroyed, said local police spokesman Chief Inspector Rowell Zafra.

Scattered debris including items traditionally sold for New Year celebrations such as cardboard horns and gifts, as well as a bloody slipper, lay at the mall's entrance where the explosion took place.

Windows of surrounding buildings were shattered by the blast, witnesses said.

Investigators could not immediately say what kind of bomb was used or name any suspects, but authorities said it appeared to be similar to those used by ISIS-aligned militants in the past.

Mr Zafra said Muslim extremists who have declared allegiance to ISIS are known to be active in areas outside Cotabato.

The southern part of the largely Catholic Philippines has been rocked for decades by violent Muslim separatist insurgent groups.

More than 100,000 lives have been claimed by the rebellion, according to a government count.

The region has also suffered from banditry, bloody feuds between powerful clans and communist guerrilla activity.

In September and August, bombs went off in Isulan town, 77 kilometres south of Cotabato, killing at least three people.

Authorities said the main suspect in these blasts was the pro-ISIS Bangsamoro Islamic Freedom Fighters armed group.

President Rodrigo Duterte put the southern Mindanao region under martial rule until the end of 2018 after pro-ISIS militants seized the city of Marawi last year.

Earlier this month, legislators approved an extension of this martial law until the end of 2019.