A spokesman for Taliban militants in the valley claimed responsibility for the blast and vowed to carry out more strikes if the government did not stop military operations in the region.
"A lot of people are still under the rubble. We have recovered eight bodies," said Subhan Khan, a senior police officer in the valley.
The violence, combined with political uncertainty, has helped undermine investor confidence and send the country's financial markets on a downward spiral.
Shortly after the blast, militants ambushed a military patrol in another part of the valley, killing three soldiers, an army officer said.
Separately, fighters killed two civilians and wounded three children in a bomb attack near a security checkpost in Barikot, to the west of Mingora, the valley's main town.
Until last year, the valley had been one of the country's main tourist destinations.
But Pakistani Taliban fighters infiltrated from enclaves on the Afghan border last year to support a radical cleric bent on imposing hardline Islamist rule.
Violence subsided in Pakistan when a coalition government came to power after an election in February and opened talks with militants. In May, authorities in North West Frontier Province reached a peace deal with militants in Swat.
But attacks intensified again across the northwest, including the Swat Valley, after top Pakistani Taliban leader Baitullah Mehsud suspended talks in June.
On Thursday, two suicide bombers killed about 70 people outside the country's main defence industry complex near Islamabad.
The resignation of staunch U.S. ally Pervez Musharraf as president on Monday has raised questions about the government's commitment to tackle violence.
But while Musharraf's support for the U.S.-led war on terrorism was deeply unpopular, the government has vowed to keep up efforts to fight the militants.
ReutersGüncelleme Tarihi: 23 Ağustos 2008, 14:56