Eight die in India's first big attack since Mumbai

PUNE, India (Reuters) - A bomb ripped through a packed restaurant in the Indian city of Pune on Saturday, killing at least eight people including one foreigner in the country's first big attack since the 2008 Mumbai massacre.

The explosion came a day after India and Pakistan agreed to meet for high-level talks in New Delhi on February 25. New Delhi suspended a four-year-old peace process with Islamabad after the Mumbai attacks, blamed on Pakistani-based militants.

Police said the bomb was hidden in a bag left in the German Bakery restaurant, a favorite of Jewish and European visitors, when it was full of tourists on Saturday evening.

"We heard a big noise and we all rushed out. The impact was so much that there were tiny body parts everywhere," said Vinod Dhale, an employee at the bakery.

No one has claimed responsibility for the attack, which also wounded 32 people. But any sign of Pakistani involvement would worsen relations between the two nuclear rivals and further destabilize a region overshadowed by war in Afghanistan.

"Let us wait for the forensic report before we draw any conclusion," said Home (interior) Minister Palaniappan Chidambaram. "Let us not speculate," he urged reporters and promised that his ministry would issue an official statement on the attack every 4-6 hours.

Debris was strewn all around the bakery, located near an ashram or religious retreat which is also frequented by foreigners, and a Jewish center. The impact of the blast knocked the bakery's sign off, blew out windows and left a large crater inside the restaurant.

"It (the bomb) was under one of the tables ... We transferred lots of people to the ambulances ... there is no German Bakery any more," one foreigner, short of breath and resting against a wall, told local CNN-IBN television.

Police first said that four foreigners were killed but later the state government officials revised this to one.

TECHNOLOGY HUB

Pune, a few hours' drive from Mumbai, is a technology, educational and real estate hub popular with foreign students.

India put all its airports and railway stations on high alert after the blast and extra security was given to South African and Indian cricket teams playing in the country.

Militants killed 166 people during a three-day rampage through the financial capital of Mumbai in November 2008, which raised tensions between nuclear rivals Pakistan and India.

Before Mumbai, a wave of bombs hit Indian cities in 2008, killing more than 100 people.

Police blamed most of those attacks on home-grown Muslim militants, and a little-known group called the "Indian Mujahideen" claimed responsibility for some attacks.

But some Hindu militants have also been suspected of carrying out several attacks.

G.K. Pillai, a senior home ministry official, told reporters that the Pune ashram was one site surveyed by David Headley, arrested in the United States last year and charged him with scouting targets for the Mumbai rampage.

India suspects he has links to Lashkar-e-Taiba, the group blamed for the Mumbai attacks. Authorities have warned of renewed threats of attacks on Indian soil and have stepped up security in recent months across the country of 1.2 billion people.

New Delhi had been demanding action against the militants it says were behind the Mumbai assault before the peace process could resume with Islamabad. But this month it offered to hold high-level talks despite little progress in Pakistan's prosecution of seven suspects.

Analysts said that while no breakthrough on core disputes was likely in the short term, the renewed engagement between the two sides after more than a year was a good sign.

(Additional reporting by Surojit Gupta and Rina Chandran in Mumbai, Bappa Majumdar and Krittivas Mukherjee in New Delhi; Writing by Alistair Scrutton; editing by Paul de Bendern and David Stamp)