Pakistani shop owners gather at the site of a bomb explosion in the city of Peshawar on Sept. 29, 2013. (A. MAJEED/AFP/Getty Images)

A car bomb tore through a centuries-old market in Peshawar on Sunday, killing at least 41 people in the third major attack on the Pakistani city in a week.

The midday explosion at Qissa Khawani Bazaar, or the market of storytellers, damaged dozens of shops and injured more than 100 people. The carnage also included 16 members of an extended family who burned to death in a van, making them the latest symbol of Pakistan’s painful struggle to combat terrorism within its borders.

The market in Peshawar’s old city is not far from All Saints Church, where 85 people were killed a week ago in what is thought to be the worst attack on Christians in Pakistan’s history. That attack was followed by a bus bombing Friday on the outskirts of town that killed 18 government workers rushing home for Friday Muslim prayers.

The attacks in Peshawar, the capital of Khyber Pakhtunkhwa province, add fuel to the deepening mistrust between residents and government leaders over how best to restore order. The city of 1 million people appears to be bearing the brunt of militant attacks aimed at undermining Prime Minister Nawaz Sharif’s plans to hold peace talks with the Pakistani Taliban.

And with each new attack, a negotiated peace appears less likely, as Sharif’s critics back away from their earlier support for such talks.

“This is a shocking development, and the latest wave of terrorism has forced the people to review their thinking,” said Aftab Khan Sherpao, a member of the National Assembly and a former chief minister of Khyber Pakhtunkhwa.

Another legislator, Farhatullah Babar, said there is a growing sense that peace talks amount to “appeasement.”

It “has backfired and emboldened the militants not only to step up their attacks but also mount an assault on the basic structures of the state,” he said.

Qissa Khawani Bazaar was once the hub of northwest Pakistan’s spice and tea trade. According to local historians, travelers going as far as back 1 or 2 B.C. would stop there to listen to storytellers.

In 1930, during the colonial era, the market was the site of a bloody crackdown by British troops known locally as the Qissa Khawani massacre.

The market, which remains a tourist draw, now primarily consists of fruit stands and clothing stores.

According to local officials, the street was packed with shoppers Sunday when the car bomb detonated about 11 a.m. Several nearby buildings reportedly collapsed.

According to hospital officials and relatives, 16 members of the same family were among those killed in the market bombing. The family had traveled from rural northwestern Pakistan to Peshawar to prepare for a wedding. They were riding in the same small bus when the explosion occurred.

There was no immediate assertion of responsibility for the attack. A Taliban spokesman told local reporters that the group was not involved, adding that it does not target civilians. Last week, a splinter wing of the Pakistani Taliban asserted responsibility for the suicide bombings at the Protestant church, saying the attack was in protest of continued U.S. drone strikes on Pakistani soil.

On Sunday, a few hours before the bombing in the market, a suspected U.S. drone fired two missiles on a house in the northwestern tribal area, killing four suspected militants, according to Pakistani intelligence officials.

The officials added that they were still trying to identify those killed, but the area has become a haven for militants who cross the border to carry out attacks in neighboring Afghanistan.

On Friday, in a speech to the U.N. General Assembly in New York, Sharif urged the United States to cease the drone strikes.

“The use of armed drones in the border areas of Pakistan is a continued violation of our territorial integrity,” Sharif said. “It results in casualties of innocent civilians and is detrimental to our resolve and efforts to eliminate extremism and terrorism from Pakistan.”

In a statement Sunday, Sharif said the attack on the market was carried out by people who are “devoid of humanity and all religions.” He added that “barbaric acts” will “not deter the government’s resolve to ensure peace in the country.”

Former cricket star Imran Khan’s Movement for Justice party, which heads the coalitional government in Khyber Pakhtunkhwa, also is pushing for peace talks.

But Taliban leaders are signaling that they have no plans to meet with Sharif’s government in negotiations, even if he succeeds in eliminating U.S. drone strikes.

In a rare public statement, a senior Taliban leader said Friday that peace talks “would never be successful” because the group’s goal of imposing strict Islamic law in Pakistan is nonnegotiable.

“We will never move one inch back of our demand for enforcement of sharia [law], and if any Taliban commander compromises on this demand, we will not support him,” said Umer Khalid Khurasan, commander of Taliban fighters near Pakistan’s border with Afghanistan.

He added that the “army wants us talking within the constitution, but our plan is to replace the existing constitution.”

Talat Masood, a former three-star Pakistani army general, said he fears that the government is sliding toward “paralysis” as it relates to developing realistic strategies for ending the violence.

Khan reported from Peshawar. Shaiq Hussain contributed to this report.