More than 28 people were injured in the explosion in the garrison town of Nowshera, which lies around 50 kilometres (30 miles) east of Peshawar, the gateway to Pakistan`s lawless tribal region on the border with Afghanistan.
"It was a remote controlled bomb planted in a dustbin at the entrance of the bakery on the main Mall Road in the garrison town of Nowshera," Mian Iftikhar Hussain, the provincial information minister, told AFP.
The explosion sparked a huge fire which has now been brought under control, he said.
Local administration official Zakaullah Khattak told AFP the death toll from the attack stood at 18, with 28 injured.
Elsewhere in northwest Pakistan on Sunday, another remote-controlled bomb tore through a passenger vehicle parked at a bus terminal near Peshawar, killing six people and wounding 11 others.
The attacks came two days after a US drone strike which officials believe killed Pakistan`s Al-Qaeda commander Ilyas Kashmiri, one of the network`s most feared operational leaders.
The chief of the Nowshera bomb disposal squad, Tanvir Ahmed, said he believed the bakery attack was carried out by a suicide bomber.
He said officers had found what was thought to be the bomber`s head at the blast site, along with ball bearings and steel pellets, though the Pakistani Taliban, who claimed the attack in a phone call to AFP, gave a different account.
"It was a remote-controlled bomb which was planted by our men," Taliban spokesman Ehsanullah Ehsan told AFP in a phone call from an undisclosed location.
Nowshera police chief Abdullah Khan said the dead included three children.
Kashmiri had a US bounty of $5 million on his head and Pakistani officials said he was the target of Friday`s drone strike in South Waziristan, in which nine members of his banned group died.
The rugged tribal region is known as Pakistan`s premier stronghold of Taliban and Al-Qaeda linked militants.
The United States has long put pressure on Pakistan to mount a major air and ground offensive in North Waziristan, from where Taliban and Al-Qaeda insurgents launch attacks across the border in Afghanistan.
Pakistan has always maintained that any such operation would be of its own time and choosing, arguing that its 140,000 troops committed to the northwest are already too overstretched fighting militants posing a domestic threat.
More than 4,400 people have been killed across Pakistan in attacks blamed on Taliban and other Islamist extremist networks based in the tribal belt since government troops stormed a radical mosque in Islamabad in 2007. (*)
Editor: Kunto Wibisono
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