India says local Islamists bombed pilgrim city

Onlookers stand at the site of a blast in the northern Indian city of Varanasi December 7, 2010.

NEW DELHI (Reuters) - India said Wednesday a home-grown Islamist group with ties to Pakistani militants was behind a bomb attack in one of its holiest cities, and local media reported two people were questioned over the attack.

Home Secretary Gopal Pillai said traces of explosives were found at the site of Tuesday evening's blast in the northern city of Varanasi that killed a two-year old girl and injured 37 Hindu worshippers and foreign tourists.

Pillai said the crude bomb was set off by the Indian Mujahideen (IM), a local group India says has been trained by militants based in Pakistan, including the Lashkar-e-Taiba.

The IM claimed responsibility for the attack in an email to local media, police said. That email was traced to a Mumbai suburb and two people were questioned over it, local media said.

"The main players of Indian Mujahideen are based in Pakistan and they are definitely running the game from there," Mumbai Police Commissioner Sanjeev Dayal told a press conference.

Pillai has said it was "too premature" to say if individuals or groups operating from Pakistan were involved.

"The investigation is focusing on the clues we have, on suspicious characters who stayed in hotels there (Varanasi)," Pillai, the top bureaucrat in the interior ministry, told Reuters.

No one has been arrested or detained, said R.P. Singh, a senior police officer said in Lucknow, the capital of Uttar Pradesh state where Varanasi is located.

India remains jittery about the threat of militant strikes, especially since the Mumbai attacks in November 2008 which killed 166 people and raised tensions with arch rival Pakistan.

New Delhi says Pakistan-based groups aid and train militants to carry out attacks against India, a claim Islamabad rejects.

Investors closely monitor any signs of an escalation in tensions between India and Pakistan, two nuclear-armed rivals who have fought three wars.

MOSQUE ANNIVERSARY

With hundreds of temples and shrines, Varanasi, on the sacred Ganges river, is the center of Hinduism. Pilgrims flock to the city for a dip in the river, which they believe will wash away their sins.

The Indian Mujahideen has in the past claimed several attacks, including the 2008 bombings in the tourist city of Jaipur that killed 63 people and a September 2010 attack on a tourist bus outside New Delhi's main mosque.

Local media said the Indian Mujahideen, in the email claiming the attack, said the blast was retaliation for a court verdict over a disputed mosque site that gave two-thirds of the land to Hindu groups. The blast came a day after the 18th anniversary of the razing of the mosque by Hindu zealots.

The demolition had led to some of the worst religious riots in India and remains a recruitment pitch for Islamist militants.

(Additional reporting by Alka Pande in Lucknow and Henry Foy in New Delhi; Editing by Krittivas Mukherjee)