* Bomb in major city a setback for military
* Boko Haram fighting to create Islamic state
* President Jonathan under pressure to contain violence (Adds details, quotes, background)
By Lanre Ola
MAIDUGURI, Nigeria, March 1 (Reuters) - At least 10 people were killed on Saturday when a bomb exploded in the northeast Nigerian city of Maiduguri, witnesses said, in a region where the Islamist sect Boko Haram is pursuing a bloody insurgency.
Boko Haram, whose fight for an Islamic state in northern Nigeria has killed thousands and made the group the biggest threat to security in Africa's top oil producer, is increasingly targeting the civilian population.
The bomb went off at around 6 p.m. (1700 GMT) in a busy market area in Ajilari-Gomari near the city's airport, two witnesses and a police source said.
"I am at the scene now, it is very bad," local resident Ismaila Abdulraman told Reuters by telephone.
"Many men, women and children died. The fire service are on the ground now and they are bringing corpses of people and trying to put out the fire at the scene," Abdulraman added, saying he had already seen 10 bodies.
The final death toll was likely to be higher because dozens of people were trapped in the rubble, the witnesses said.
There was no immediate claim of responsibility for the bombing, but Boko Haram only communicates occasionally through Internet videos, days or weeks after attacks.
The military and police did not immediately respond to requests for official comment.
President Goodluck Jonathan started an intensified military push to end Boko Haram's four-and-a-half year insurgency almost a year ago but the bloodshed has not diminished. He is expected to run in a closely contested election next year.
The violence has been largely contained to Nigeria's remote northeastern rural areas on the borders with Cameroon and Niger, far from commercial hubs such as Lagos and Abuja, and from the southern oil fields. The attack in the northeast's biggest city marks a setback for Jonathan's military campaign.
"The insurgents targeted a busy area where they knew many people usually visit in the evening for commercial activities. It appears Boko Haram are in the city again," a policeman said, asking not to be named.
Dozens of school children were shot or burned to death in a rural region near the northeastern city of Damaturu last week.
Insurgents killed more than 300 people last month, mostly civilians, including in two other attacks that killed around 100 each, one in which militants razed a village and shot panicked residents as they tried to flee.
Western governments are concerned about Nigerian groups such as Boko Haram linking up with al Qaeda-linked cells in other countries in the Sahel region, such as Mali, where France sent troops a year ago to oust Islamist militants. (Writing by Joe Brock; Editing by Alistair Lyon)
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