PESHAWAR:  A bomb attack killed two people and wounded at least 15 others Thursday in the main town of Pakistan`s Swat valley, where the military put down a Taliban uprising last year, police said.

It was the first such attack in the northwestern district since May and underscored prevailing insecurity in a region that was until last year had been largely outside government control and paralysed by Taliban militants.

The bombing came as the Indian and Pakistani foreign ministers in Islamabad held their first substantive talks since the 2008 Mumbai attacks -- which New Delhi blamed on Pakistani militants -- torpedoed their peace process.

Suicide and bomb attacks blamed on Taliban and Al-Qaeda-linked militants have killed more than 3,500 people across nuclear-armed Pakistan since government troops besieged a radical mosque in Islamabad in July 2007.

Police said initial reports suggested that a suicide bomber was responsible. The bomb ripped through a busy street outside a bus terminal in Mingora near an army patrol, indicating the military could have been the target.

Television footage showed volunteers carrying a body away from the blast scene, while others frantically pulled at the twisted car doors to rescue other victims in a street littered with burnt out vehicles.

"At least two people were killed and 15 wounded," said Qazi Jamil, police chief for the northwestern Malakand region that includes Swat.

"The blast occurred by the bus terminal. An army patrol was passing from the road," he said.

Mingora is 125 kilometres (80 miles) northwest of the capital Islamabad and the main town in Swat, a mountain valley of enormous natural beauty that was once a popular tourist destination for Pakistanis and Westerners.

For two years the Taliban paralysed much of the Swat district by promoting a repressive brand of Islamic law, opposing secular girls` education and beheading opponents, until the government ordered in thousands of troops.

In April 2009, Pakistan launched a major offensive in the neighbouring districts of Buner and Lower Dir, then advanced through Swat.

After heavy fighting that displaced an estimated two million people, the military declared the region back under army control last summer and tentative efforts have begun to kickstart development and revive the economy.

Many of the displaced have now returned to their homes to rebuild their lives, but skirmishes, threats and tensions have remained.

On May 1, a suicide bomber blew himself up at the entrance to a busy market in Mingora, killing three people and wounding 12 others. Similarly last February, a similar attack killed nine people.

BDST: 1432 HRS, 15 July 2010