ZAMBOANGA, Philippines (AP) — A bomb exploded Friday inside a parked bus, killing three people in a southern Philippine city where government troops are battling a holdout group of Muslim rebels holding about 20 hostages.

The improvised explosive was placed inside a bag and killed the bus conductor and two other employees. The driver was wounded, police Chief Inspector Ariel Huesca said.

The violence in Zamboanga comes as troops search house-to-house in two neighborhoods to flush out about 30 to 40 Muslim rebels who seized scores of civilians as human shields 12 days ago when government forces repulsed their bid to occupy the port city.

The military operations have rescued more than 170 hostages, and killed and captured about 200 rebels. Thirteen security forces and eight civilians have also died.

It was the most serious fighting in years between rebels and government forces in the predominantly Roman Catholic nation's south, the scene of decades-old struggle for self-rule by minority Muslims.

The rebel faction involved in the fighting is loyal to Moro National Liberation Front leader Nur Misuari. The group dropped its demand for a separate Muslim state and signed an autonomy deal with the government in 1996, but the guerrillas did not lay down their arms and later accused the government of reneging on a promise to develop long-neglected Muslim regions.

Misuari's group has splintered into factions and faded in the background while a bigger, rival group entered talks with the government on enlarging an autonomous Muslim region in the southern Philippines.

Misuari has not been seen since the rebel siege began, but President Benigno Aquino III said Thursday that there was growing evidence of his involvement.

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