Blast in Pakistan's Peshawar kills 3

Men gather at the site of a blast in Peshawar December 5, 2009. The accidental blast destroyed a shop in northwest Pakistan on Saturday, killing at least three people, officials said, unnerving a city frequently bombed by militants.

PESHAWAR, Pakistan (Reuters) - An accidental blast destroyed a shop in northwest Pakistan on Saturday, killing at least three people, officials said, unnerving a city frequently bombed by militants.

Police said initially that a bomb had exploded near a fast food restaurant. Hours later two police officers and a local government official said it was an accidental blast.

"We did not find any substance which indicated it was a bomb," said Peshawar police chief Liaqat Ali Khan.

Pakistan's army, which heavily supported militant groups in their war against the Soviet occupation in Afghanistan, now faces a stubborn Taliban insurgency on its own soil and mounting U.S. pressure to root out Islamist fighters in tribal border areas.

In a reminder of serious security challenges the army faces, militants attacked a mosque near Pakistan's army headquarters in Rawalpindi on Friday, killing at least 40 people, including army officers, just a 30-minute drive from the capital Islamabad.

Peshawar has been hit the hardest by bombings blamed on militants. Aside from a loss of life, the violence has also had a psychological and financial toll.

Standing at the scene of Saturday's blast, where people on the second floor of a burning building pleaded for help, taxi driver Noorzada Khan tried to make sense of all the violence that has kept residents at home and deprived him of business.

"They're professional killers. They're doing all this for money. They must be funded from outside. They cannot run such things alone," he said.

Foreign Minister Shah Mahmood Qureshi condemned the latest wave of violence and said Pakistan's will would not be broken.

"Such reprehensible acts can never defeat our national resolve to fight out terrorism and militancy," he said in a statement.

On Friday night, up to 40 militants attacked an army checkpoint, killing one soldier, a security official said.

Soldiers at the checkpoint on a bridge in Wana, the main town in the Islamist bastion of South Waziristan, retaliated after coming under fire, said the security official.

The military has said it made gains in a major offensive in October in South Waziristan, a global Islamist hub.

But militants have carried out retaliatory bombings, killing hundreds of people and pressuring increasingly unpopular Pakistani President Asif Ali Zardari to neutralize the insurgency as he fights for his political survival.

Some Pakistanis seem to be losing confidence in security forces.

"I don't know what's happening? How do they enter Peshawar city with explosives or explosive-laden vehicles? What are police or other agencies doing?," asked university student Tahir Khan.

"People hate the Taliban. We're angry about what they're doing but someone has to give us security and control them or eliminate them."

That is unlikely to happen soon, as evidenced by the attack by suicide bombers and gunmen near army headquarters, the biggest challenge to the writ of the state since October.

President Barack Obama highlighted Pakistan's struggle against militants this week in outlining his plans to send 30,000 more troops to Afghanistan.

U.S. PRESSURE

In one of his most important speeches, he called on Pakistan, the third largest recipient of U.S. aid, to crack down harder on militants to help U.S. troops fight the Taliban in Afghanistan. He warned that Washington would not tolerate Pakistan allowing its territory to be a safe haven for militants.

Ultimately, it is Pakistan's all-powerful military that calls the shots on setting foreign policy on Afghanistan or responding to U.S. requests for greater cooperation on militants.

The generals have been at odds with Zardari, who has little influence. U.S. attempts to boost cooperation with Pakistan have backfired in some ways.

A new $7.5 billion assistance package signed in October which reserves the right to cut off aid if Islamabad does not crack down on militants angered the military and ordinary Pakistanis who see it as a humiliating violation of Pakistan's sovereignty.

(Additional reporting by Faris Ali and Kamran Haider; Writing by Michael Georgy; Editing by Jerry Norton)