At least 8 dead in blast near Pakistani mosque

ISLAMABAD (Reuters) - A suicide bomber killed at leasteight people and wounded 23 in an attack on police who had beenguarding Islamists marking the anniversary of an army commandoraid on Islamabad's Red Mosque.

The attack will raise questions about a new government'spolicy of trying to end militant violence through negotiationsand increase concern about prospects for the country, anuclear-armed U.S. ally making a transition to civilian rule.

President Pervez Musharraf, whose power has withered sincehis allies were defeated in a February election and who hasbeen facing calls to step down, said on Friday more radicalmosques would emerge if extremism and militancy were nottackled.

The former army chief ruled out resigning, saying he wasneeded to help politicians avoid an economic meltdown andtackle the militant threat.

The blast happened several hundred metres (yards) from thecity-centre mosque, shortly after a tightly guarded meeting ofIslamists there had ended.

Worshippers could be seen streaming out of the mosque afterthe explosion. Sirens were heard across the city as ambulancesraced towards the scene on what had been a quiet evening.

There were conflicting casualty figures with several seniorpolicemen and city officials saying more than 10 people hadbeen killed. A security official said 12 people had beenkilled, all but one or two policemen.

But the Interior Ministry said eight people had been killedand 23 wounded.

"Police were going back to their stations when ithappened," said senior police official Kamran Adil.

"The primary target was our men."

Body parts, pools of blood and police equipment litteredthe road and nearby walls were pocked by shrapnel.

The government's top Interior Ministry official, RehmanMalik, told reporters the bomb had been caused by a suicidebomber and police had found the upper part of his body.

The attack is likely to add to worry among stock investors,whose confidence has been undermined by political squabbling,insecurity and economic problems, including inflation runningat more than 20 percent.

Stocks have been sliding and the rupee set a new lowagainst the dollar last week.

"JIHAD"

Earlier on Sunday, several thousand Islamists listened tofiery speeches at a protest meeting at the mosque to mark thefirst anniversary of the army raid on the complex.

More than 100 people were killed when commandos stormed theRed Mosque complex, which included a madrasa or Islamicseminary, on July 10 last year, after a week-long siege thatbegan when gunmen from the mosque clashed with police outside.

Speakers told the crowd, most of them men, that Musharrafwas to blame for the bloodshed last year.

"Pervez Musharraf, you thought you could crush the Islamicmovement by attacking the Lal Masjid (Red Mosque), but we aretelling you, you have failed," Shah Abdul Aziz, a cleric andformer member of the parliament, told the crowd.

"It was done at the behest of America and Bush. But I wantto tell America jihad will continue, it will never stop," hesaid as protesters shouted "al jihad", or holy war.

The mosque's hardline clerics and supporters waged aviolent campaign to enforce Taliban-style rule, kidnappingwomen they accused of prostitution and some policemen, andstorming music and video shops and beauty parlours.

They also accumulated weapons and battled security forcesfor days after the siege began, rejecting calls to surrender.

The assault unleashed a wave of suicide attacks across thecountry in which hundreds of people were killed, includingformer prime minister Benazir Bhutto.

Baitullah Mehsud, a Pakistani Taliban leader based in anethnic Pashtun tribal region on the Afghan border who has linkswith al Qaeda and banned sectarian militants, has been blamedfor most of the attacks.

The new ruling coalition, led by Bhutto's party, has beentrying to negotiate peace with him through tribal leaders,although U.S. commanders in Afghanistan say pacts lead to moreattacks there.

Despite the peace efforts, security forces launched a sweepon June 28 against militants from another faction in Khyberregion who had trying to impose Taliban ways in the nearbynorthwestern city of Peshawar.

Security around the mosque was tight on Sunday with policeblocking roads and frisking many bearded Islamists passingthrough metal detectors.

"The killers of innocent male and female students do notdeserve any mercy," read a banner strung up outside the mosque.

Speakers warned the government against any crackdown onreligious schools and said any attempt would be met with force.

(Additional reporting by Kamran Haider and AugustineAnthony; Writing by Robert Birsel; Editing by Dominic Evans)