Afghan diplomat abducted in Pakistan

ISLAMABAD (Reuters) - Gunmen kidnapped an Afghan diplomatin the Pakistani city of Peshawar 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.

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.

"Masked gunmen intercepted his vehicle and took him awayafter killing his driver," said consulate official NoorMohammad Takal. "It's a very serious incident. The Pakistanigovernment needs to give security to diplomats."

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.

"END MILITARY INTERVENTION"

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.

Troops were attacking militant hideouts in the Bajaurregion where the government says more than 600 militants havebeen killed in fighting since August.

But a senior opposition politician, former prime ministerNawaz Sharif, said the government should reject U.S. pressureto fight militants, halt offensives and "sit down at the sametable" and negotiate peace.

"The government must immediately end any militaryintervention in the tribal areas," Sharif said in an interviewwith Italy's La Repubblica newspaper.

"I condemn the Marriott attack, but condemnation is notsufficient to straighten things out. We must avoid thepressures of the United States and think for ourselves," hesaid.

FOREIGNERS KILLED

Islamabad police chief Asghar Raza Gardezi said no arrestshad been made in connection with Saturday's blast.

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.

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; Editing by Paul Tait)