An unattended bag containing the dynamite was set on fire during an alcohol-fueled celebration in the middle of the wholesale market in the city of Juliaca late Friday, police said, ruling out terrorism.

Many people were injured in the chaotic aftermath of the explosion, which sparked a stampede for the exits at the International Tupac Amaru Market, a hospital spokesman said.

"A bag with explosives that had been forgotten in the market was set on fire and exploded, leaving people dead," said national police 12th district police chief Raul Becerra.

"It was an irresponsible and involuntary act, a product of alcohol," he said, noting that people had been drinking since the afternoon.