Dhaka: At least seven people were killed and dozens wounded in an explosion in Bangladesh capital Dhaka late on Sunday with authorities initially suspecting it to have been caused by gas cylinder blasts.

"So far, we came to know seven people were killed in the explosion," Dhaka's police commissioner Shafiqul Islam told newspersons at the scene at Moghbazar area adding that the explosion damaged seven buildings and three passenger buses.

Fire Brigade chief Brigadier General Sajjad Hossain said primary evidence suggested gas cylinder blasts caused the explosion but 'we are yet to know how it actually occurred'.

"There were gas cylinders at a restaurant at the ground floor of a nearby building and air-conditioners at a showroom upstairs while there were gas cylinders as well at the road construction site at the scene... Investigations have been launched," Hossain said.

TV channels reported dozens of wounded, mostly bus passengers and passers by, being treated at three hospitals where doctors said many of them received severe burn injuries.

According to residents in the neighbourhood, the explosion rocked the part of the city spreading panic while television footage showed broken pillars, concrete and glass shards strewn across the street at the scene in the central part of the country's capital.

"I was on a bus when the explosion occurred. I jumped out of it through a narrow window of the vehicle, initially thinking the bus gas cylinder exploded... Never experienced such a big explosion in my life," 50-year-old Tajul Islam, who received injuries on his waist and complained of hearing impairment due to the explosion, told PTI.

Another witness said he saw a fireball go over his head and the explosion turned everything dark and smoky in his vicinity while pieces of glass started to shower from above.

"The sound was so huge... It scared everyone," he told a TV channel.

According to witnesses, soon after the explosion the buses and cars crashed into one another while panic-gripped passengers struggled to come out of the vehicles.