Dense black smoke billowed from the badly damaged building and sirens blared as emergency service crews rushed to Moi Avenue, a major road running through the city centre.

Police Commissioner Mathew Iteere said it was too early to determine the cause of the blast. He said blackened wires inside the trading centre indicated a possible electrical fault but did not rule out a bomb.

More than ten people have been killed in a string of attacks in Nairobi and the port city of Mombasa since Kenya sent troops into Somalia in October to fight al-Qaeda-linked militants.

Nairobi has blamed the al Shabaab militants, who merged with al-Qaeda earlier this year, for the surge in violence and kidnappings that has threatened tourism in east Africa's biggest economy and wider regional destabilisation.

A military helicopter hovered in the skies above downtown Nairobi and the security forces cordoned off nearby streets.

Medics applied bandages to the walking wounded gathered by nearby buildings and some bystanders wailed in shock. Clothing, shoes and blown out windows littered the road.

Crowds carried away people seen with blood streaming down their faces.

"There was a huge bang followed by people screaming and shouting," said one witness who declined to be named.

Assistant Internal Security Minister Joshua Ojode said 15 people were wounded, 11 of them critically. A Reuters cameraman at the main public hospital said medics reported 27 casualties.

There have been several attacks near the border with Somalia since Kenya's military incursion. At least five people were killed in two separate attacks in the remote region on Saturday.

Currency traders said the blast weakened the Kenyan shilling At 1115 GMT the local currency traded at 85.55/75 against the dollar after earlier trading at 85.30/50.

"We have seen a bit of depreciation on the local currency. It's right in the central business district, so it's not very good news to be getting, and I think that causes some fear," said Duncan Kinuthia, head of trading at Commercial Bank of Africa.