A massive explosion gutted Mexico's biggest fireworks market, killing at least 29 people and injuring 70, authorities said.

The conflagration, in the Mexico City suburb of Tultepec, set off a quick-fire series of multicoloured blasts and sent a vast cloud of smoke billowing over the capital city, AFP reported.

The market had been packed with customers buying pyrotechnics for traditional end-of-year festivities.

"We recovered 26 bodies at the scene of the incident. And three more have died in the hospital, for a total of 29 dead," Mexico state's governor Eruviel Avila said.

Federal police said on Twitter that 70 people were hurt and were transported to emergency rooms.

Fire crews struggled for three hours before bringing the blaze under control.

The head of the civil protection service, Luis Felipe Puente, said crews had to wait for all the fireworks to finish exploding before they could extinguish the flames.

"The entire market is gone," he said.

IMAGE: Police officers walk amongst the wreckage of houses destroyed in an explosion at the San Pablito fireworks market outside the Mexican capital. Photograph: Edgard Garrido/Reuters