Army repels Taliban in NW Pakistan after hotel blast

PESHAWAR, Pakistan (Reuters) - Pakistan began a new operation against Taliban fighters in the northwest on Wednesday as Washington's envoy praised what he saw as a new resolve from Islamabad in combating extremism.

The latest offensive came one day after an attack on a luxury hotel in Peshawar killed at least nine people, including two foreign U.N. workers.

Taliban militants have stepped up attacks in cities since the army launched a campaign in April to clear Taliban fighters from a stronghold in Swat and other parts of northwest Pakistan.

Richard Holbrooke, the U.S. special representative for Afghanistan and Pakistan, said he saw a dramatic shift in the Pakistani government's attitude because of public outrage over the Taliban's actions, including the attack on the hotel.

"What I saw in Pakistan on this trip was a slow emergence of a consensus behind the government's actions," Holbrooke said in Washington, reporting back on his trip last week.

Asked whether he thought Pakistan's government was strong enough to defeat the Taliban, he replied: "I think they are."

More than 1,300 militants and 105 soldiers have been killed in Swat, and the army's resolve has heartened U.S. officials, who have been worried that nuclear-armed Pakistan could slide into chaos unless the Taliban's advance weren't stopped.

Holbrooke sidestepped questions on whether the Pakistani government had a broad counterinsurgency strategy, beyond its military offensive, to retain popular support.

With the Swat offensive in its closing stages, the military said on Wednesday it had launched an operation in Bannu, 94 miles southwest of Peshawar, after up to 800 militants slipped into the district.

"Gunships, artillery and ground troops are being used in the operation," a military official said on condition of anonymity, but he had no details on militant casualties.

BIG TEST AHEAD

Bannu lies at the gateway to the Waziristan tribal region, another Taliban and al Qaeda stronghold, and the Islamist fighters aimed to raise havoc in other parts of the northwest, according to a military statement.

The attack on Peshawar's Pearl Continental, a hotel frequented by VIPs and foreigners visiting the capital of North West Frontier Province, will inevitably reinforce concerns over insecurity in Pakistan.

Pakistan's decision to opt for military action in Swat has been helped by a shift in public opinion. That support might ebb if the welfare of some 2.5 million people displaced by the conflict in the northwest is mishandled.

Holbrooke said he had stayed in the Pearl hotel previously and confirmed the United States had looked at the building either for purchase or rent for its consulate.

Less than a third of the hotel's 150 rooms were occupied, but the blast blew out all the windows, and caused several walls and a section of floors to collapse on the front side.

U.N. agencies issued statements saying five workers, including a Serbian man, a Philippine woman and three Pakistanis, were among those killed in the assault on the Pearl Continental,

Qazi Jameel, a senior police official, told Reuters that nine people were killed in the Peshawar hotel attack, and rescuers were still looking for more victims.

The toll excludes dead militants and people still missing. Some officials gave higher tolls. A British and a Nigerian man, and a German woman were among more than 60 wounded.

The United Nations is heavily involved in relief efforts and about a dozen U.N. staff were staying at the Pearl Continental.

Militants had shot their way into the forecourt and exploded a truck bomb in front of the lobby, evoking nightmarish memories of the attack on the Marriott hotel in Islamabad last September that killed 55 people.

News channels ran closed circuit television camera footage of the checkpost at the hotel gateway on the main road.

It showed a cyclist speaking to a security guard, who then returned to his cabin. As the cyclist pedaled through, a retractable metal barrier in the driveway was lowered.

A saloon car pulled in, briefly stopped and then sped over the lowered barrier toward the hotel, swiftly followed by a small truck. Another guard ran for cover as shots were fired.

Police said the bomb contained 500 kg (1,100 lb) of explosives, a similar size to the bomb at the Marriott.

There was no claim of responsibility, but the Taliban have warned of retaliation because of the Swat offensive, and the style of attack was similar to recent others.

The Karachi share market's benchmark index lost 0.56 percent due to investor nerves over deteriorating security.

(Additional reporting by Zeeshan Haider, Alamgir Bitani, Kamran Haider, Faris Ali, Aizaz Mohmand and Sue Pleming in Washington; Writing by Simon Cameron-Moore; Editing by Sanjeev Miglani)