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Police spokesman Sadiq Ali Adan says the driver defied orders to stop on Saturday morning, and police opened fire as passersby ran for their lives.
He says more than a dozen vehicles were destroyed in the blast.
This latest bombing occurred as Somali politicians argue over how to hold a national election.
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More talks on the election crisis are set for Monday.
The al-Qaida-linked al-Shabab extremist group based in Somalia often targets high-profile areas of Mogadishu. It has threatened to attack the polls.