At least 14 people were killed and other 60 wounded in the bomb attack at a market in the southern city of Davao, the government has said.
Rodrigo Duterte – who was in Davao at the time of the attack but was not near the market – has declared a “state of lawlessness” following the explosion.
This allows troops to be based in cities to assist the police.
National Defence Secretary Delfin Lorenzana said that Abu Sayyaf wanted to retaliate after suffering heavy casualties on its stronghold of Jolo island about 550 miles from Davao.
“We have predicted this – and warned our troops accordingly,” Delfin Lorenzana said in a statement.
A presidential spokesman said investigators had found shrapnel from a mortar-based improvised explosive device (IED) at the scene.
The explosion took place in an area frequently visited by Rodrigo Duterte.
The president said the Philippines was going through “extraordinary times” which was why he had decided to allow the security forces to conduct searches previously done solely by the police.
In the aftermath of the explosion there were conflicting claims as to who may have carried it out.
Mindanao police director Manuel Gaerlan was reported by the Philippine Daily Inquirer as putting forward a theory that “disgruntled vendors” upset over the awarding of stalls in the market were responsible.
The government for their part initially said they were considering the possibility that drug syndicates were behind the blast before concluding that Abu Sayyaf were to blame.
A spokesman for the Abu Sayyaf was reported to have claimed responsibility soon after the attack.
However, the Inquirer quoted a senior Abu Sayyaf leader as saying it was in fact carried out by “an allied group”.
The region has been under a heightened security alert in recent weeks because of a military offensive against Abu Sayyaf.
Davao is the biggest city in the southern Philippines and has a population of about two million people. It is about 1,000 miles from the capital Manila.
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