By Matthias Williams
NEW DELHI (Reuters) - India demanded Pakistan hand over 20 of its most-wanted fugitives as a sign of good faith, while both sides on Tuesday tried to cool tensions over the Mumbai attacks before a visit by Washington's top diplomat.
India's foreign minister said military action was not being considered but later warned a peace process between the two, begun in 2004, was at risk if Pakistan did not act decisively.
His Pakistani counterpart offered a joint probe to find the militants responsible for a three-day rampage that killed 183 in India's financial capital last week.
Indian accusations that Pakistan had again let militants stage attacks from its soil have stirred longstanding tensions and threatened to reverse improving ties between the nuclear-armed rivals.
India renewed its years-old demand for about 20 fugitives it believes are hiding in Pakistan, via a protest note given to Pakistan's High Commissioner Shahid Malik in New Delhi on Monday, Foreign Minister Pranab Mukherjee told reporters.
Officials said the Indian list included Dawood Ibrahim, a Mumbai underworld leader, and Maulana Masood Azhar, a Pakistani Muslim cleric freed from jail in India in exchange for passengers on a hijacked plane.
While India was not considering any military response, it reserved the right to take measures to protect its territorial integrity, he told India's NDTV.
"We have no intention of not carrying out the peace process," Mukherjee told NDTV. "If these incidents...are not adequately addressed by the other side, it becomes difficult to carry out business as usual and that includes the peace process."
RICE TO VISIT
U.S. Secretary of State Condoleezza Rice is due in India on Wednesday to try to lower tensions after the attacks in Mumbai, which could threaten a U.S.-led effort to battle militants along Pakistan's Afghan border.
Pakistan Foreign Minister Shah Mehmood Qureshi, speaking in a televised address, said Pakistan wanted good relations with India and that now was not the time for a "blame game, taunts (and) finger-pointing."
"The government of Pakistan has offered a joint investigating mechanism and a joint commission to India. We are ready to jointly go into the depth of this issue and we are ready to compose a team that could help you," Qureshi said.
Qureshi made no mention of the fugitive list, but Information Minister Sherry Rehman told reporters: "We have to look at it formally once we get it and we will frame a response."
Dawood Ibrahim, India's most wanted man, is reported to be living in Pakistan. Security experts say the underworld boss has militant ties, and India wants him for bomb attacks in Mumbai in 1993 that killed at least 250 people.
Mumbai's police chief Hasan Gafoor on Tuesday said the attackers had trained for a year or more in commando tactics.
"There have been no arrests so far except the one terrorist we have detained. We are interrogating many suspects," Gafoor told a news conference, the first since the attacks.
Azam Amir Kasav, the only gunmen of the 10 not killed by commandos, told investigators he is a Pakistani citizen from Punjab, Gafoor said. Gafoor declined to comment about the nationalities of the nine dead militants.
Investigators have said a former Pakistani army officer led the training, organised by the Pakistani Lashkar-e-Taiba group blamed for a 2001 attack on India's parliament. Ibrahim is said to be one of its financial backers.
The 2001 attack nearly set off the fourth war between the two countries since Pakistan was carved from India in 1947 after independence from Britain.
The Mumbai attacks have also rocked India's ruling Congress party coalition. The interior minister has resigned and other top politicians from the party have offered to step down.
Analysts say Prime Minister Manmohan Singh, facing an election by May, must walk a delicate line not to upset regional stability while acting forcefully enough to counter opposition accusations that Congress is weak on security.
Many Indians have expressed anger at apparent intelligence lapses and a slow security reaction to the attacks against Mumbai's two best-known luxury hotels and other landmarks in the city of 18 million.
The city on Tuesday was back at work for a second day since the attacks, with residents hitting the gym or seeking counselling. One of the two hotels targeted, the Trident, was due to reopen soon.
(Reporting by NEW DELHI, MUMBAI and ISLAMABAD bureaux, Sue Pleming and Adrian Croft in LONDON; Writing by Bryson Hull; Editing by Mark Trevelyan)
