(For a related FACTBOX see [ISL279499]) (Adds Taliban comment, stocks)
By Junaid Khan
KOTA, Pakistan, May 15 (Reuters) - Pakistani authorities temporarily lifted a curfew on Friday to enable thousands of people to flee the fighting in the militant bastion of Swat and join more than 800,000 who have already left.
The army launched an offensive in Swat, northwest of Islamabad, last week to stop the spread of Taliban influence which had alarmed the United States and other Western allies of nuclear-armed Pakistan.
The military said the curfew had been lifted in Minogra, Swat's main town which the Taliban still control, and other areas for eight hours.
"We have been waiting for the curfew to be lifted as the fighting has intensified and our food was almost finished," said Mohammad Zari, fleeing Minogra on foot with his family.
Hundreds of people were streaming down a road from Swat, heading south where authorities have set up camps on the low land. [ID:nISL430893]
The army, which is surrounding Minogra, has banned private cars from entering the town but the government had laid on 150 vehicles about 8 km (five miles) southwest to take people away, the military said.
At least 830,000 people have fled from their homes, joining more than 500,000 displaced by earlier fighting in the northwest.
The U.N. High Commissioner for Refugees has called for massive international help to avert a tragedy.
Residents began fleeing late last month when the army attacked the Taliban in two districts near Swat they had occupied in violation of a February peace pact aimed at ending violence in the former tourist valley.
Prime Minister Yusuf Raza Gilani said on Thursday the army would defeat the Taliban militarily but risked losing the support of the people if it did not help those forced from their homes in the country's largest ever internal displacement.
Investors in Pakistani stocks have been unnerved by the fighting in recent days but the Karachi Stock Exchange's benchmark 100-share index .KSE was 0.32 percent higher at 7,165.32 by mid-afternoon on Friday.
The offensive in Swat came after the United States accused the government of "abdicating" to the militants. Pakistani action against militants in its northwest is vital for U.S. efforts to defeat al Qaeda and stabilise neighbouring Afghanistan.
Most political parties and members of the public support the offensive, despite widespread scepticism about a close alliance with the United States in its campaign against militancy.
But opposition will grow if many civilians are killed in the fighting or if the displaced are seen to be enduring undue hardship.
The military has said there have been no reports of civilian casualties in its actions as soldiers were targeting militants in mountains and urban warfare had not started, though it has warned that would come.
The military said late on Thursday about 124 militants and nine soldiers had been killed in the previous 24 hours. That would take the toll to around 870 militants and 45 soldiers.
Reporters have left Swat and there was no independent confirmation of the casualties.
About 15,000 members of the security forces face about 5,000 militants in the Swat region, the military says.
Meanwhile, Taliban in the Waziristan region on the Afghan border said war loomed in their area and demanded the immediate end of attacks by pilotless U.S. drone aircraft, the release of Taliban prisoners and the withdrawal of troops.
"The army and the government is given 10 days to consider and implement these demands after which they will be responsible for all consequences," a Taliban umbrella group said in a statement.
"War clouds loom over North and South Waziristan."
An ethnic Pashtun tribal leader in South Waziristan, Waris Khan Mehsud, said people fearing fighting had begun leaving areas under the control of Pakistani Taliban leader Baitullah Mehsud.