Philippine President Rodrigo Duterte inspected the scene of Friday's attack at a night market in central Davao City, his home town.

He said his declaration that covers the southern Mindanao region did not amount to an imposition of martial law.

It would allow troops to be deployed in urban centres to back up the police in setting up checkpoints and increasing patrols, he aid.

An Abu Sayyaf spokesman, Abu Rami, claimed responsibility for the blast near the Jesuit-run Ateneo de Davao University and a five-star hotel.

But Mr Duterte said investigators were looking at other possible suspects, including drug syndicates, which he has targeted in a bloody crackdown.

"These are extraordinary times and I supposed that I'm authorised to allow the security forces of this country to do searches," Mr Duterte told reporters at the scene of the attack, asking the public to co-operate and be vigilant.

"We're trying to cope up with a crisis now. There is a crisis in this country involving drugs, extrajudicial killings and there seems to be an environment of lawless violence."

Mr Duterte served as mayor of Davao for years before elected to the presidency in June.

Police immediately set up more checkpoints in key roads leading to the city, a regional gateway about 610 miles south of Manila. Police forces in the capital also went on full alert at midnight.

The attack came as Philippine forces were on alert amid a military offensive against Abu Sayyaf extremists in southern Sulu province, which intensified last week after the militants beheaded a kidnapped villager.

The militants threatened to launch an unspecified attack after the military said 30 of the gunmen were killed in the week-long offensive.

Some commanders of the Abu Sayyaf, which is blacklisted by the US and the Philippines as a terrorist organisation because of deadly bombings, ransom kidnappings and beheadings, have pledged allegiance to the Islamic State group.

The military, however, says there has been no evidence of a direct collaboration and militant action may have been aimed at bolstering their image after years of combat setbacks.

Communications secretary Martin Andanar said the bomb appeared to have been made from a mortar round and doctors reported many of the victims had shrapnel wounds.

Despite the emergency, Mr Duterte said he would proceed with a trip to Brunei, Laos and Indonesia starting on Sunday.

US National Security Council spokesman Ned Price said that local authorities in the Philippines continue to investigate the cause of the explosion, and the United States stands ready to provide assistance to the inquiry.

President Barack Obama will offer his personal condolences to Mr Duterte when the two leaders meet on the sidelines of the annual summit of the Association of Southeast Asian Nations leaders with some Western leaders in Laos next week.