Two suicide bombers blew themselves up outside Pakistan's main defence industry complex today as workers were leaving at the end of their shift, killing 59 people, officials said.
Pakistani Taliban claimed responsibility.
Al-Qaeda-linked militants have launched a wave of attacks on Pakistani security forces over the past year, bombing military camps, patrols and transport.
The violence combined with political uncertainty has helped undermine investor confidence and send the country's financial markets on a downward spiral.
"There were bodies lying everywhere and wounded people soaked in blood were screaming for help," said Shah, the manager of a petrol station near the industrial complex in Wah, 30 kilometres northwest of Islamabad.
"Many of the wounded were either without legs or hands. I could see body parts hanging on trees," he said.
A Pakistani Taliban spokesman said the blasts were retaliation for military operations against militants in the northwestern region of Bajaur, on the Afghan border.
"If it doesn't stop we will continue such attacks," Taliban spokesman Maulvi Omar said. "The Wah factory is a killer factory where arms are being produced to kill our women and children."
A hospital official said 59 people had been killed and 81 wounded in the blasts near the heavily guarded complex, the hub of Pakistan's defence industry where about 25,000 workers produce explosives, ordnance and weapons in about 15 factories.
Hundreds of workers were milling about outside the complex at the end of their shift when the bombers struck. One of the bombers blew himself up outside the complex's main gate while the second detonated his explosives at almost the same time near another gate.
Pakistani Taliban said last week they were behind a bomb attack on an air force bus in the city of Peshawar which killed 13 people. The blast was in retaliation for military operations in the northwest, a militant spokesman said.
This week's resignation of President Pervez Musharraf, under threat of impeachment from the ruling coalition, has raised questions about the government's commitment to tackle violence.
Although Musharraf's support for the US-led war on terrorism was deeply unpopular, the government has vowed to keep up efforts to fight the militants.