A bomber drove a truck loaded with explosives into the market in Urgun district of southeastern Paktika province as it thronged with shoppers last morning.
The attack, which followed another blast targeting a presidential palace media staff bus in Kabul, highlights the fragile security situation Afghanistan faces as NATO progressively withdraws its 50,000 remaining combat troops, leaving local forces to battle a resilient Taliban insurgency.
Nabi Jan Mullahkhil, the police chief in Paktika, said the investigation into the blast was under way.
"The death toll is still 42 killed including women and children and around 60 wounded."
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The Afghan defence ministry issued a statement today to correct a death toll of 89 that an official had previously given yesterday.
"We are sending this correction today, because due to the rush, wrong figures were given to media yesterday," the statement said.
"Based on the latest information, 42 were martyred and 67 wounded in yesterday's attack in Urgun."
Numerous other sources, including the office of President Hamid Karzai, yesterday put the death toll between 41 and 43.
There was no immediate claim of responsibility and the Taliban denied they were behind the blast in a tweet from a recognised account. They regularly deny attacks that kill civilians.
Paktika borders Pakistan's tribal areas including North Waziristan, where the Pakistani military are in the midst of a major offensive against militants.
Hundreds of fighters are thought to have fled across the border into Afghanistan.
As part of their annual spring offensive, the Taliban have increased attacks on foreign and Afghan security forces, but it is usually civilians who suffer the brunt of the casualties.