Manila - One man was killed and 32 wounded when unidentified suspects hurled two grenades at a crowded town plaza in the southern Philippines, the army said Sunday.

The attack occurred late Saturday in Maasim town in Sarangani province, 980 kilometres south of Manila, while the municipality was celebrating a festival and its founding anniversary.

Lieutenant Colonel Kurt Decapia, an army spokesman, said the suspects first hurled a grenade at civilians watching a show at the town plaza.

A second grenade was hurled in front of a nearby store, he added.

A 26-year-old man was killed on the spot, while 32 people were rushed to hospital for treatment. Two of the wounded were in critical condition.

No suspects or motive have been identified for the attack, but authorities said they received intelligence reports that Muslim militants could have been behind the attack.

"This is a clear manifestation of the terrorist aim of sowing fear and panic by means of bloodshed and destruction," said Major General Reynaldo Mapagu, an army commander.

Last year, Muslim separatist rebels attacked several villages in the southern region of Mindanao, including in Sarangani, to protest the scrapping of a territorial agreement with the government.

The violence, which triggered heavy fighting with the military, prompted the government to postpone peace talks with the Moro Islamic Liberation Front (MILF).

More than 300 people have been killed since the hostilities erupted in August 2008, while more than 500,000 people were displaced at the height of the fighting.

The MILF is the largest Muslim rebel group fighting for an independent Islamic state in the southern Philippines. It has been waging the secessionist struggle since 1978. (dpa)