It said six people, including four constables, a soldier and a civilian were killed.
Local residents said dozens of passengers in a nearby bus were also wounded, but only 14 people were kept in the hospital for treatment.
A civilian wounded in the blast later succumbed to his injuries, local officials said.
A police official said two nearby shops were also destroyed by the blast.
Another soldier was killed and two more wounded in another Claymore mine attack in the Jaffna peninsula, a ministry spokesman said, adding that four constables escaped with injuries in a similar attack in Batticaloa.
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Even as the attacks marked a surge in violence, a senior Indian diplomat visited Colombo and held talks with President Mahinda Rajapakse on the current security situation, a