No group have claimed responsibility for the attack, but two Turkish officials said the attack could have been carried out by Kurdish extremists.
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The blast, which also wounded at least 36 people, was a few hundred meters from an area where police buses are often stationed.
Embarrassed by accusations of security lapses, Erdogan has lashed out at journalists, activists and intellectuals who criticise his renewed battle with the PKK and the suffering it has brought to parts of southeast Turkey, calling them “accomplices” of terror.
The Magen David Adom rescue service also said on Saturday that one Israeli was confirmed dead, although the Foreign Ministry has yet to verify the report.
“The attacker detonated the bomb before reaching the target point because they were scared of the police”, the official said, declining to be named as the investigation is ongoing.
Police sealed off the street in the heart of the European side of Istanbul for several hours after the attack. Forensic teams in white suits scoured the area for evidence.
“When I came out, people were running in every direction, but I ran towards the blast site to see what happened”, said the waiter who gave just his first name Mustafa. No one was treating him but then I saw someone who appeared to be a regular citizen trying to do something to the body.
Istiklal Street, usually thronged with shoppers at weekends, was quieter than normal as more people are staying home after a series of deadly bombings. An Israeli diplomat in Istanbul said the two also held American citizenship. “We don’t have any confirmation that the attack targeted Israelis”, Netanyahu told media at the foreign ministry.
More recently, Kurdish rebels embroiled in a resurgent conflict with the state have also staged suicide attacks, striking Ankara twice over the past month, killing dozens of people. Twelve of the wounded were foreigners, he said.
Health Minister Mehmet Muezzinoglu said 36 people had been wounded, seven of them in serious condition. A court in Ankara yesterday evening remanded five people in custody on suspicion of links to last week’s attack in the capital which was carried out by a 24-year-old female student named by TAK as Seher Cagla Demir.
NATO’s Secretary General Jens Stoltenberg condemned the attack in Istanbul, describing it as “yet another terrorist outrage targeting innocent civilians and our ally Turkey”.
Iranian Foreign Minister Javar Zarif, who was in Istanbul to meet with his Turkish counterpart Mevlut Cavusoglu, also condemned the “inhumane” attack and offered his condolences.
France condemned the attack as “despicable and cowardly”.
On Thursday, Germany had closed its embassy in Ankara, the German school in Ankara and the consulate in Istanbul, which is in the same neighborhood as the blast, following a security warning.
Turkey, which is a partner in the U.S.-led war against the Islamic State, has also been drawn deeper into the Syrian conflict and forced to absorb 2.7 million Syrian refugees.
In July, the PKK resumed its three-decade-long insurgency against the Turkish state following the collapse of a shaky two-year ceasefire.
In its armed campaign in Turkey, the PKK has historically struck directly at the security forces but recent bombings suggest it could be shifting tactics.
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Turkey has had heightened security in Ankara and Istanbul in the run-up to a Kurdish spring festival of Newroz on March 21, which Kurds in Turkey traditionally use to assert their ethnic identity and demand greater rights.
