Shots fired at Pakistani PM's motorcade

ISLAMABAD (Reuters) - Taliban gunmen fired shots at Pakistani Prime Minister Yousaf Raza Gilani's motorcade near Islamabad's airport on Wednesday, but officials and police said he was not in it at the time.

The Taliban claimed responsibility for the attack days ahead of a presidential election, which is bound to compound the fears of investors and allies, who worry about chronic political instability and Islamist violence in the nuclear-armed country.

Senior police official Rao Mohammad Iqbal said the motorcade was heading to the airport to pick up Gilani when it was attacked. "The car was going towards the airport when it was fired upon from a small hill ... two bullets hit the driver's window," Iqbal said.

Earlier, the prime minister's spokesman, Zahid Bashir, said shots were fired at Gilani's motorcade but he was not hurt.

The prime minister's office said multiple sniper shots had been fired and television pictures showed two bullet marks a couple of inches apart on the cracked bullet-proof window.

Gilani is a senior member of former prime minister Benazir Bhutto's party. She was killed in a suicide gun and bomb attack on December 27 while campaigning for a general election.

The government said al Qaeda-linked militants killed her.

Bhutto's party went on to win the February 18 election and Gilani became prime minister of a coalition government.

TALIBAN CLAIM ATTACK

A Pakistani Taliban spokesman said Gilani was attacked because he was responsible for offensives against militants in the northwest.

"We will continue such attacks on government officials and installations," said the militant spokesman, Muslim Khan.

Pakistani Taliban and their al Qaeda allies have unleashed a wave of bomb attacks, including some on political leaders such as Bhutto, over the past year. Hundreds of people have been killed.

Former president Pervez Musharraf, who resigned last month, narrowly survived two bomb attacks blamed on al Qaeda.

Bhutto's widower, Asif Ali Zardari, who now leads her party and is expected to win a presidential election on Saturday, last week moved from his home in Islamabad into the heavily guarded prime minister's house because of security fears.

British opposition leader David Cameron, who was due to meet Gilani later on Wednesday, alluded to the attack in a speech in Islamabad saying it was "another reminder of the permanent threat that terrorism poses".

Cameron urged Pakistan to do more to fight extremism, including exerting control and better governance in tribal areas where the Taliban and al Qaeda are based.

He said Pakistani intelligence agencies need to be fully committed to fighting terrorism -- a reference to suspicions about the reliability of the Pakistani security apparatus.

Pakistan's financial markets had shut before news of the attack broke but it is likely to add to pressure on a sliding rupee and stocks. The rupee, which has lost more than 20 percent against the dollar this year, traded at a record low of 77.45 on Wednesday.

Pakistani shares, propped up by a floor placed on the stock index last week, ended almost flat. The index has fallen about 41 percent since its lifetime high in April and 34 percent this year.

Rising food and fuel prices have driven inflation up to nearly 25 percent, while trade and fiscal deficits are widening.

"GRAVE PROVOCATION"

While the government has come in for criticism for not focusing on economic problems, it is also under pressure from the United States and other Western countries with troops in Afghanistan to tackle Taliban in border sanctuaries.

The United States says al Qaeda and Taliban militants are based in Pakistan's ethnic Pashtun tribal areas on the Afghan border, where they orchestrate attacks in Afghanistan and Pakistan and plot violence in the West.

Early on Wednesday, suspected U.S. soldiers from Afghanistan backed by helicopter gunships attacked inside Pakistan, killing 20 people, including women and children, officials said.

The attack in a border village in the South Waziristan region sparked an uproar. Gilani condemned the attack, saying Pakistan was fully capable of tackling militants on its own, while the Foreign Ministry said it would lodge a diplomatic protest.

"Such actions are counter-productive and certainly do not help our joint efforts to fight terrorism. On the contrary, they undermine the very basis of cooperation and may fuel the fire of hatred and violence," the ministry said.

A spokeswoman for Afghanistan's NATO-led force said she had no information about the incident. Pentagon spokesman Bryan Whitman said: "I have nothing for you on those reports."

Separately, Pakistani forces killed 30 militants during a clash in Swat, a valley northwest of Islamabad where there has been fighting since late 2007, a military spokesman said.

(Additional reporting by Kamran Haider, Simon Cameron-Moore, Aftab Borka and Junaid Khan; Writing by Robert Birsel; Editing by Bill Tarrant)