Philippine police say a powerful explosion that killed at least three people and wounded 27 others was caused by a bomb detonated by suspected Muslim militants.

The attack took place at a hotel filled with wedding guests in the southern Philippine port city of Zamboanga.

Police Senior Superintendent Edwin De Ocampo said investigators found traces of a bomb in the ruins of the hotel hours after the Sunday night blast.

The force of the blast destroyed the upper floor of the two-story building. A fire that followed the explosion swept through the ground floor.

Although no group has claimed responsibility, Zamboanga is located in a region occupied by al-Qaida-linked Abu Sayyaf militants, who operate on nearby Basilan island.

Witnesses described a scene of chaos as the blast blew off the hotel roof, collapsed the second floor and shattered windows of nearby buildings. Aira Grefalda, one of the wounded, said she was in one of the guest house rooms when the bomb went off.

Zamboanga city, a trading hub, is located in a volatile region troubled by a decades-long Muslim insurgency, extortion gangs and kidnappings for ransom.