Afghan diplomat abducted in Pakistan as worry grows

ISLAMABAD (Reuters) - Gunmen kidnapped an Afghan diplomatin the Pakistani city of Peshawer on Monday, police said,underscoring worsening security in the nuclear-armed countrytwo days after a suicide bomber killed 53 people.

British Airways said it had suspended flights to Pakistanbecause of security fears after the Saturday evening truck-bombattack on Islamabad's Marriott Hotel.

The Czech ambassador and at least three other foreignerswere among those killed in the blast, Islamabad's worst bombattack, which wounded 266 people and which security officialssaid bore the hallmarks of al Qaeda.

There has been no claim of responsibility but thegovernment said it expected the investigation would lead to alQaeda and Taliban militants in the Federally AdministeredTribal Areas on the Afghan border.

Interior Ministry chief Rehman Malik said President AsifAli Zardari, as well as the prime minister and army commander,had been due to attend a dinner at the hotel on Saturday nightbut the venue was changed on the prime minister's advice.

The beleaguered Pakistani rupee sank to a new low, tradingat 78.55 to the dollar before closing at 78.21/28. The rupeehas lost 21.2 percent against the dollar this year.

The blast reinforced investors' negative attitudes aftermonths of political uncertainty, a currency dealer said.

DRIVER KILLED

The Afghan consul general in Peshawar was kidnapped aftergunmen ambushed his car and killed his driver. Gunmen openedfire on a U.S. diplomat in the city last month.

"The consul general was going home from his office when hiscar was fired upon. His driver has been killed and unidentifiedmen have kidnapped the consul general," said an Afghanconsulate official in Peshawar.

Shortly before the attack in Peshawar, a British Airwaysspokesman said the airline had suspended its six flights a weekto Pakistan while the company reviewed security.

The hotel bombing has raised fresh calls for Pakistan'sgovernment to rethink its alliance with the United States andmilitary operations against Islamist militants, which manyPakistanis blame for inciting violence.

Pakistan's army is in the midst of an offensive againstmilitants in the Bajaur region on the Afghan border, while theUnited States has intensified attacks on militants on thePakistani side of the border, infuriating the Pakistani army.

A security official said troops had fired at two U.S.helicopters that intruded into Pakistani air space on Sundaynight, forcing them back to Afghanistan.

RETHINK POLICY

Elsewhere, troops were attacking militant hideouts in theBajaur region where the government says more than 600 militantshave been killed in fighting since August.

But a senior opposition politician said offensives were notworking and the government should rethink its policy.

"Enough force has been used but what's the result? Anincrease in terrorist activities," said Zafar Iqbal Jhagra, avice president of former prime minister Nawaz Sharif's party.

"The war on terror will be another disaster if we keepfollowing this course," he said, adding some troops should bewithdrawn to show that authorities were serious about talks.

Islamabad police chief Asghar Raza Gardezi said no arrestshad been made in connection with the Marriott blast anddeclined to give any details about the hunt for evidence.

Among the foreigners killed were a Vietnamese woman and twomembers of the U.S. armed forces assigned to the U.S. embassy.

A U.S. State Department employee was unaccounted for andDenmark's security service said one of its staff, attached tothe Danish mission, was missing and presumed dead.

The Interior Ministry said 11 foreigners were among thewounded after the bomber blew up a truck packed with 600 kg(1,320 lb) of explosives, including artillery shells.

A political analyst said, despite scepticism about securitypolicy, the severity of Saturday's bombing should haveconvinced more people the military was not just fightingAmerica's war.

"Your state is being challenged and people are coming andkilling innocent people ... what do you negotiate with them?"said Shafqat Mahmood, a former government minister and analyst.

Authorities could take advantage of anger over the attack,he said. "This is a popular government not a militarygovernment, it has support among the people. They can mobilisetheir support for fighting real challenges," he said.

Financial analysts said the bombing would be a blow forforeign investment but not a severe one unless it marked thebeginning of a new phase of violence.

"In the near-term, investor sentiment, which is alreadyrunning weak, will be further dented," said Asif Qureshi, headof research at Invisor Securities Ltd.

The cost of buying protection on debt from Pakistan roseafter the attack. A five-year CDS (credit default swap) was nottraded but a dealer said it was quoted at 1,500 basis points,about 50 bps wider than Friday.

(Additional reporting by Augustine Anthony and Sahar Ahmed;Writing by Robert Birsel)