By Matthias Williams
NEW DELHI (Reuters) - India demanded Pakistan hand over 20 of its most wanted fugitives as a sign of good faith on Tuesday, while both sides tried to cool tensions over the Mumbai attacks that have threatened improving ties.
India's foreign minister said military action was not being considered and 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.
India renewed its demand for men it has hunted for years in a protest note handed to Pakistan's High Commissioner Shahid Malik in New Delhi on Monday, Foreign Minister Pranab Mukherjee told reporters.
"We have in our demarche (diplomatic protest) asked for the arrest and handover of those persons who are settled in Pakistan and who are fugitive of Indian law," he said on Tuesday, adding about 20 people were on the list.
Officials said the 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.
New Delhi's foreign ministry said on Monday that Malik had been told that "Pakistan's actions needed to match the sentiments expressed by its leadership that it wishes to have a qualitatively new relationship with India."
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.
MOST WANTED
Arab League Secretary-General Amr Moussa was in New Delhi on a scheduled visit on Tuesday while U.S. Secretary of State Condoleezza Rice was due to arrive on Wednesday.
India has blamed Islamist militants based in Pakistan for the attacks in India's financial capital.
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.
Newspaper reports have said his henchmen in the city may also have provided support in the latest strike.
Indian investigators have said the Mumbai attackers had months of commando training in Pakistan by the Lashkar-e-Taiba group, blamed for a 2001 attack on India's parliament. Ibrahim is said to be one of its financers.
The 2001 attack on India's parliament nearly set off the fourth war between the two countries since Pakistan was carved from India in 1947 after independence from Britain.
ANGER
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 Congress is weak on security.
Many Indians have expressed anger at apparent intelligence lapses and a slow reaction by security forces 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.
The management of the Trident hotel, a favourite with businessmen that was hit, said it would reopen in 10-15 days.
"Guests will come back to the hotel they knew," Oberoi Group spokeswoman Ketaki Narain said, adding they were already getting inquiries about room and restaurant reservations.
Rice's visit underscores the gravity with which Washington sees the regional implications of the attacks.
She met British counterpart David Miliband in London on Monday and both said they expected Pakistan to cooperate, a view echoed by EU foreign policy chief Javier Solana.
Officials in Islamabad have warned any deterioration of ties would force it to divert troops to the Indian border and away from a U.S.-led anti-militant campaign on the Afghan frontier.
Britain's chief of defence staff Air Chief Marshal Jock Stirrup said that would have deep consequences.
"There's a risk they and we could be diverted from the real issue: dealing with the terrorist groups who perpetrate such criminal and barbaric acts," Stirrup said in a speech.
(Reporting by NEW DELHI, MUMBAI and ISLAMABAD bureaux, Sue Pleming and Adrian Croft in LONDON; Writing by Raju Gopalakrishnan and Bryson Hull; Editing by Alistair Scrutton and Sanjeev Miglani)
