A car bomb killed at least three people in a busy area of Somalia's capital on Saturday in the latest terror attack to hit the African country.

Initial reports had said that a  huge blast was heard in Mogadishu followed by gunfire.

At least eight other people were wounded, and the toll is feared to increase. 

"The place is busy with hotels and supermarkets. Most of the casualties are pedestrians. The casualty number is sure to rise," Police Major Nur Farah told Reuters. 

Last month, an Al Shabaab attack on a hotel in Mogadishu had killed 15 people.