The rebels were killed late Friday in Paktia province near the border with Pakistan, Afghan army general Sami-Ul Haq Badar said.

"We set an ambush, attacked them and killed 67 Taliban. Their bodies were lying on the ground," he said.

The general said the soldiers had been tipped off that there were Taliban in the area. No Afghan or foreign soldiers were hurt in the gunfight, which lasted several hours, he said.

Paktia is one of the most violent regions in Afghanistan and one where the Taliban are at their most active, launching regular attacks on Afghan and foreign troops.

The attack took place in Jaji district, where Pakistan and Afghan forces traded fire over two days last week, killing 13 Afghans.

A Nato soldier was shot dead -- reportedly by a man in Pakistani military uniform -- just across the border after talks to defuse the tensions. A Pakistani soldier was also killed.

The Taliban, ousted from power more than five years ago, are still active in the south and east of the country.

The rebels have threatened a wave of violence, including suicide bombings and roadside explosions, following the killing of their top military commander Mullah Dadullah a week ago.

Dadullah was the most senior Taliban member to be killed since the group's toppling in late 2001 by a US-led coalition that invaded Afghanistan following the September 11 attacks.

Meanwhile, a suicide blast tore through a bazaar in a normally quiet town in northern Afghanistan Saturday, killing three German soldiers and six Afghan civilians, a governor said.

The German soldiers were hit while shopping in a market in the town of Kunduz, the provincial governor told AFP.

"Three of our German friends were killed and two were wounded. One Afghan interpreter was also wounded," Kunduz governor Mohammad Omar said.

Six Afghans were killed and 12 others wounded, six of them critically, he said.

All that was left of the bomber was two legs, Omar said.

The attack was the most deadly against the German troops since 2003, when four were killed in a suicide car bombing in Kabul.

Nato's International Security Assistance Force media office in the capital Kabul confirmed there had been an explosion but said it had no details.

The German military based in the main northern city of Mazar-i-Sharif said it could not yet release any information. Germany has around 3,000 troops in Afghanistan, operating largely in the north of the country.

Twenty-one German soldiers have lost their lives in Afghanistan since 2002, including the ones killed on Saturday.