A bomb ripped through a passenger bus in southern Pakistan on Saturday, killing two people and injuring 18 just hours after police announced they had quashed a terror plot by arresting four Islamic militants armed with grenades.

There was no immediate claim of responsibility for the explosion aboard a local bus in Hyderabad, about 60 miles north of Karachi. It was the second bus bombing in as many months in Hyderabad, where attacks are largely fueled by ethnic and religious conflict.

In Karachi, the capital of Sindh province and the site of frequent violence against foreigners, police announced earlier Saturday that four suspects arrested late Friday had been planning to carry out suicide attacks. Pakistan has already been hit by at least 12 such attacks or plots this year.

The men told police they had been recruited by two members of Osama bin Laden's al-Qaida network. All four suspects belonged to the outlawed Islamic group Jaish-e-Mohammed, and were looking to buy high-powered explosives.

"We swiftly took action when we received our information and were able to arrest all four terrorists with three hand grenades," said Shafi Rind, divisional police officer in eastern Karachi.

Police also announced Saturday they had confirmed the death of terror suspect Asif Ramzi, linked to the killing of Wall Street Journal correspondent Daniel Pearl and a June bomb attack on the U.S. consulate in Karachi.

Ramzi died Thursday in the explosion of what police said was an Islamic militant bomb-making factory. His wife and mother identified his body.

In Saturday's arrests, Karachi police acted on a tip to collar the four suspects as they headed toward a major street where they were allegedly planning to blow up a bridge.

They told police they were recruited more than two months ago by two men from a Middle Eastern country. They said they were given $180 to purchase explosives -- mostly grenades -- in remote tribal regions, where such weapons are readily available.

Police did not disclose the identities of the alleged recruiters or their nationalities but said they believe the two were members of al-Qaida.

The four Pakistani suspects -- identified as Riaz Uddin, Aziz Mubarak, Mohammed Kamran and Abdul Rehman -- said they carried out several robberies to get money to buy more explosives and weapons.

In recent months, they said their gang stole $3,350, all of which they used to buy weapons.

A court ordered them held without bail. A new, strict anti-terrorism law permits authorities in Pakistan to suspected terrorists for one year without filing charges.

Pakistan outlawed the suspect's group, Jaish-e-Mohammed, last January. The United States has declared it a terrorist organization.

But just two weeks ago, the head of the organization, Massoud Azhar, was ordered released from house arrest. Dozens of members of militant Islamic organizations have been freed from jail in Pakistan in recent weeks, many of them in the deeply conservative regions governed by Islamic conservatives near the Afghanistan border.

Police in Karachi arrested three men a week ago they said were planning to attack American diplomats. Police also seized about 250 sacks of ammonium nitrate, a fertilizer used in explosives.

One of those suspects, Asif Zaheer, reportedly told investigators that a suicide bombing that killed 11 French engineers and three Pakistanis outside a Karachi hotel in May meant to hit Americans. Zaheer allegedly helped rig a car used in the attack with explosives.

"We regretted after reading in newspapers the next morning that our target was not Americans but French engineers working on a submarine project for Pakistan," Zaheer said, according to an investigator who requested anonymity.

The investigator said the terrorists monitored the Pakistani Navy bus carrying the French victims, then rammed it with the bomb-laden car. They believed Americans were on board.

In previous months, militants in Pakistan have lobbed grenades into a Protestant church, at European tourists visiting an archaeological site, and into a Presbyterian hospital. They have also shot up a Christian school and the offices of a Christian aid organization, and bombed the Macedonian Consulate in Karachi.