PESHAWAR, Pakistan – A suicide car-bomber killed at least three people on Monday near a Pakistan air force base close to the northwestern city of Peshawar and the Afghan border, a government official said.

The city has been targeted several times since the army began an offensive against the Taliban in South Waziristan last month and militants stepped up retaliatory attacks. Hundreds of people have been killed.

"Three people have been killed and 13 wounded but the toll could rise," senior city administrator Sahibzada Anis told Reuters.

The attacker apparently targeted a police station outside the Badaber air base on the city's outskirts. The blast badly damaged the police station, a mosque and a shop.

Witness Mohammad Jawed said a yellow car slammed into the wall of the police station.

The army went on the offensive in South Waziristan on the Afghan border on October 17, aiming to root out Pakistani Taliban militants who stepped up their war on security forces in 2007.

The militants have responded with intensified attacks in towns and cities across the country.

The United States, weighing options as it struggles to stabilize Afghanistan, says Pakistani action against militants in border enclaves is vital for its Afghan effort.

The violence in recent weeks has rattled investors and the main stock index has lost about 5 percent since the offensive began.

However, it ended 1.60 percent higher at 9,067.17 on Friday after the International Monetary Fund (IMF) said the previous day the economy showed signs of recovery but risks remained.

Finance Minister Shaukat Tarin told Reuters the IMF had expressed concern about how insecurity could affect the economy.

Separately, suspected Taliban gunmen shot dead a pro-government ethnic Pashtun tribal elder in the Bajaur region, north of Peshawar, a government official in the region said.

Militants have killed hundreds of pro-government tribal leaders over recent years.