A car bomb explosion has killed at least two people in the southern Russian city of Pyatigorsk, Russia's news agencies reported.

Friday's incident is a worrying development for the Kremlin as Russia prepares to host 2014 Winter Olympics in Sochi, west of Pyatigorsk and north of a strip of mostly Muslim provinces plagued by near-daily violence linked to insurgency.

Interfax news agency said the blast badly damaged a traffic police building, but Itar-Tass news agency reported that the car bomb exploded near a shopping centre.

State-run RIA news agency cited Yekaterina Danilova, a spokeswoman for the regional Investigative Committee, as saying two people were killed, but Interfax and Itar-Tass both put the death toll at three.

Local news reports said investigators had not determined the cause of the blast and the victims had not been identified.

Deep-rooted insurgency

Friday's attack came two months after a suicide bomber killed six people on a bus in the southern Russian city of Volgograd in October.

President Vladimir Putin has ordered law enforcement agencies to improve security in the region ahead of the Sochi Games.

Armed groups usually carry out attacks in cities beyond the borders of the North Caucasus.

In a video posted online in July, the leader of the Chechen insurgency, Doku Umarov, urged rebels to use "maximum force" to prevent Putin from staging the Olympics.

Rebels say they want to carve out a Muslim state in the North Caucasus. Their insurgency is rooted in two post-Soviet wars in Chechnya, one of the region's provinces.

Putin, who was first elected president in 2000 after launching the second war, which drove Chechen separatists from power, has staked his reputation on a safe and successful Games.