Nov. 2 (Bloomberg) -- At least 33 people were killed in an explosion close to the Shalimar Hotel in Pakistan’s garrison town of Rawalpindi as the government placed a $5 million bounty on Taliban militants.

The latest death toll was given by the Edhi Ambulance service, which also said several people were injured.

“The blast happened in front of a bank as a line of people came to collect salaries and pensions on the first working day of the month,” said Muneer Ahmed, a police officer at the scene, about 16 kilometers (10 miles) from the capital, Islamabad.

Pro-Taliban insurgents stepped up suicide bombings and attacks after Pakistan’s army last month began its biggest offensive against extremists in the South Waziristan region bordering Afghanistan. Today’s bombing brings the combined death toll to more than 300 people.

In a later explosion in Lahore, at least 15 people were injured, some of whom are in critical condition, Edhi spokesman Asis Mesum said by telephone from the eastern city.

The Rawalpindi blast broke windows and destroyed cars. Television stations showed rescue workers ferrying the injured to ambulances as police and soldiers attempted to clear the area. The bomb, which detonated about half a kilometer from Pakistan’s army headquarters in Rawalpindi, was placed in a motorcycle, police Superintendent Ishtiaq Shah said.

Toll May Rise

“It’s a very crowded area so the toll could rise,” Captain Rashid, a spokesman for Edhi, said by telephone from Islamabad.

Pakistan’s government earlier today offered cash rewards for the capture of Taliban leader Hakimullah Mehsud and 18 of his fighters as the army intensifies efforts to clear militants from the tribal regions before winter sets in next month.

The bounty was offered in advertisements placed on the front pages of The News and The Jang newspapers. Mehsud, leader of the Tehreek-e-Taliban group that Pakistan blames for 80 percent of terrorist attacks on its soil, commanded an individual reward of 50 million rupees ($600,000).

The authorities in May offered cash for information leading to the capture of 21 Taliban fighters in the northwestern Swat Valley.

U.S. Secretary of State Hillary Clinton, visiting Pakistan last week, said al-Qaeda had a haven in the border region and Pakistan’s government should hunt down militant leaders.

The army has been attacking a terrorist base at Sararogha in South Waziristan. Soldiers advanced after sealing off the town on three sides, the official Associated Press of Pakistan cited the army as saying in a statement yesterday. Troops have entered the town, the Nation newspaper said.

United Nations Secretary General Ban Ki-moon said the world body had raised the security level to “phase four” in the North West Frontier Province and the Federally Administered Tribal Areas of Pakistan, Agence France-Presse reported, citing a UN statement.

To contact the reporters on this story: Farhan Sharif in Karachi at fsharif2@bloomberg.net; Khaleeq Ahmed in Islamabad at kkhan8@bloomberg.net.

Last Updated: November 2, 2009 09:20 EST