A group of protestors hurled the makeshift bomb onto a bus in Istanbul's Bagcilar suburb setting the vehicle alight and causing its passengers to panic - one of whom, an elderly woman got off the bus and was hit by a car in the street, dying in hospital.
Two more bodies were recovered after police removed the wreckage of the bus, which crashed into a truck while manoeuvring to escape the hit.
A woman passenger was also seriously injured in the attack.
Television footage showed fire-fighters battling the flames which engulfed the bus, which was reduced to a blackened skeleton.
Angry residents gathering at the site, reportedly chanted slogans against Kurdish separatism, NTV television reported.
Street battles
A 22-year-old Kurdish man, was killed by gunfire in the south-eastern town of Kiziltepe, near the Syrian border, where street battles between rioters and the police flared for a second day in row.
An angry crowd torched a bank and vandalized public buildings, party offices and shops in Kiziltepe, prompting security forces to fire warning shots and use tear gas.
Three other people were injured in the clash, a senior local Kurdish politician, Ferhan Turk, told AFP, the two incidents bringing the death toll from a week of violence to 12.
Istanbul protests
About 200 protesters, some wearing masks, gathered in Istanbul, home to a sizeable Kurdish immigrant community, early Sunday, setting fire to a truck and hurling Molotov cocktails, stones and bottles at the riot police, who responded with truncheons and pepper gas.
Several protestors, running from the police, were attacked by a group of residents in a mainly Roma neighbourhood wielding knives and sticks and shouting nationalist slogans.
At least seven demonstrators were detained, the Anatolia news agency said.
Ahmet Turk, the co-chairman of Turkey's main Kurdish party, the Democratic Society Party (DTP), urged an end to the violence and called on the government to come up with far-reaching reforms to make permanent peace.
Mr Turk described the riots as the explosion of entangled political, social and economic problems that have plagued the southeast, Turkey's poorest region, for decades.
The riots erupted Tuesday in Diyarbakir, the largest city in the mainly Kurdish southeast, after hundreds of youths demanding vengeance attacked the police following the funerals of Kurdish rebels killed in fighting with the army.
Three of the victims of the violence were children, one aged only three, and most of the injured were security forces.
Officials say the unrest was orchestrated by the outlawed
Kurdistan Workers' Party (PKK), which has waged an armed separatist campaign against the government since 1984.
Tensions have been on the rise, since June 2004, when the PKK, blacklisted as a terrorist group by Turkey, the EU and the United States, called off a five-year ceasefire.
Compared to much more hardline practices in the past, this time, the response of the security forces was more restrained apparently to avoid damage to relations with the EU.