ISLAMABAD: A suspected Taliban suicide bomb killed at least 35 people in the Pakistani city of Rawalpindi yesterday, officials said, as the government announced a reward for the capture, dead or alive, of the group's leader.

Pakistan Taliban militants are being squeezed out of their remote strongholds near the Afghan border by a massive army offensive and have retaliated by stepping up bomb attacks and commando-style raids on urban targets.

The army offensive is being closely watched by the US and other powers embroiled in neighbouring Afghanistan, as the border area has become a sanctuary for insurgent groups from both countries as well as foreign Al Qaeda militants.

Yesterday's blast came as the Pakistan government announced rewards of up to $5 million (BD2m) for information leading to the capture, dead or alive, of Pakistan Taliban leader Hakimullah Mehsud and more than a dozen other leaders.

The attack in Rawalpindi, a large sprawling city that twins the smaller, administrative capital, Islamabad, took place in an area that is home to the army headquarters as well as some hotels.

Officials said many of the victims were elderly people who had gathered at a bank to withdraw their pensions.

The military said four soldiers were among those killed.

"It was a huge blast. Smoke is rising from the scene," Nasir Naqvi, who runs a travel agency near the site of the blast, said.

Last month, militants launched a brazen attack on the Pakistani army headquarters in Rawalpindi, taking dozens of people hostage before commandos stormed the building and rescued them.

Last week, in the deadliest militant attack in more than two years, more than 100 people were killed and scores more wounded when a car bomb detonated in a crowded market in the northwest frontier city of Peshawar.

The announcement of the bounty on Hakimullah's head was made through newspaper advertisements as security forces zeroed in on his Tehrik-e-Taliban Pakistan strongholds in south Waziristan.