Kathmandu  - At least two people were killed and more than a dozen others injured after a powerful explosion ripped through a bus stop in Nepal's restive southern plains, media reports said Sunday.

The blast happened as people waited for a bus in the town of Nizgardh in Rautahat district, about 120 kilometres south-east of the capital Kathmandu on late Saturday evening, Kantipur daily newspaper said.

"Two people died of their wounds while being rushed to a hospital while at least 13 people including four children were wounded by the blast," the newspaper said.

The blast was caused by a time bomb which was hidden in a sack of wheat, the newspaper quoted the police as saying.

"There was panic in Nizgardh town after the blast and people shut down their shops and the roads were deserted," the newspaper said.

A fringe separatist group calling itself "Terai Army" claimed responsibility for the bombing.

Police said the group has been involved in several abductions, murder and bomb attacks against government offices and employees in the Nepal's southern plains known as Terai.

Several groups in southern Nepal have continued their armed insurgency in southern Nepal despite the country's move towards peace.

Terai Army has also rejected the April elections which elected a new constituent assembly to draft the country's new constitution and is demanding a separate state for the ethnic Madhesi community.

It has alleged discrimination by people from hill districts of Nepal who have traditionally led the government in Kathmandu against the ethnic Madhesi people.

Terai Army also called a five-day general strike along the highway to press their demands.

Attempts by the Nepalese government to bring the armed groups for peace negotiations have so far failed. (dpa)