Television footage showed a battery of rescuers searching through the rubble for survivors. Authorities said people could still be trapped under the debris.
Bomb disposal experts were also seen removing what appeared to be grenade launchers from the site, which was littered with collapsed structures and mingled metal frames, including electricity poles and the axle of a truck.
There was no immediate claim of responsibility by any group.
Punjab, the country's richest and most-populous province, has been recently hit by a string of attacks attributed to militant groups which have developed links with the Taliban fighters in the north-western region near the Afghan border.
The Taliban have also warned the government of terrorist strikes across the country in revenge for ongoing counterinsurgency operations.