The violence along a major street is bound to raise more questions about the effectiveness of security crackdowns on al Qaeda-backed Taliban insurgents at a time when Washington wants Pakistan to help stabilise neighbouring Afghanistan.
We have 12 dead and up to 40 wounded. Some of the wounded are in critical condition, Kaleem Sheikh, senior doctor at Karachi's main hospital, told Reuters.
The Pakistani Taliban have carried out waves of bombings at crowded markets and army and police facilities, killing hundreds of people since October in a bid to topple the pro-American government of unpopular President Asif Ali Zardari.
Senior police officer Ghulam Nabi told Reuters: Initial reports suggest a bus carrying Shi'ites was hit by a motorbike laden with explosives.
The attack had all the trademarks of a Taliban operation.
Karachi has been largely free of Islamist violence over the past couple of years, but a bomb at a minority Shi'ite Muslim procession in late December fuelled concern that the militants were expanding their fight to the city.
Sustained violence in Karachi, which has recently witnessed heightened political tension, could further dampen investor confidence in the sluggish economy.
Zardari's government is struggling against Taliban insurgents who seem to carry out suicide bombings at will and a sluggish economy and chronic shortages have also hurt its credibility.A motorcyclist exploded near a bus ahead of us. We took off and rescued wounded, Zafar Abbas told Reuters.
It's cruel. They are not Muslims. They are not human. The government is responsible because it has failed to provide us security and control terrorists.
Dozens of enraged Shi'ites gathered at the scene of the blast. Some scuffled with police.
Wednesday the al Qaeda-backed Taliban claimed responsibility for a high-profile bomb attack that killed three U.S. Special Operations soldiers near a girls' school in northwest Pakistan, and threatened more attacks on Americans.
(Reporting by Faisal Aziz and Augustine Anthony and Kamran Haider in ISLAMABAD; Editing by Michael Georgy)