Bomber attacks Pakistani intelligence agency; 10 dead

PESHAWAR, Pakistan (Reuters) - A suicide car bomber attacked an office of Pakistan's main intelligence agency in the northwestern city of Peshawar on Friday, killing 10 people and wounding 60, officials said.

The city, near the Afghan border, has been targeted several times since the army began an offensive against the Taliban in South Waziristan last month and militants stepped up retaliatory attacks.

A military spokesman said the bomber's target was the office of the Inter-Services Intelligence (ISI) agency and the bomber detonated his explosives at a checkpost outside.

The attack came shortly before U.S. National Security Adviser Jim Jones began meetings with military and government leaders in Islamabad.

The United States, weighing options as it struggles to stabilize Afghanistan, says Pakistani action against militants in border enclaves is vital for its Afghan effort.

The blast brought down the front of the three-storey building and sent a thick column of smoke billowing over the city.

A wounded soldier said the bomber was in a type of vehicle that usually delivers medical supplies.

"All of a sudden it appeared on the wrong side of the road and began coming toward the office," the soldier, Nasir, told Reuters. "The guards opened fire but it came to the entrance of the building as the firing went on and exploded."

It was not clear how many people were in the building when the bomber struck at about 6:40 a.m. (0140 GMT).

The ISI has in the past supported Islamists, beginning with guerrillas battling Soviet occupiers in Afghanistan in the 1980s, but in recent years has become a target of some factions.

INVESTORS RATTLED

Shortly after the Peshawar attack, a suicide car bomber attacked a police station near the town of Bannu, killing seven people including five policemen. Bannu is a gateway to North Waziristan, another militant sanctuary, on the Afghan border.

Security is tight across the country with numerous checks on roads and it was not clear how the bomber was able to approach the ISI office.

Militants who attacked army headquarters in Rawalpindi last month were dressed in army uniforms and traveled in a vehicle with military markings, reflecting an increasing sophistication in their attacks.

The army went on the offensive in South Waziristan last month, aiming to root out Pakistani Taliban militants who stepped up their war on the security forces in 2007.

The militants have responded with intensified attacks in towns and cities, killing several hundred people.

The army said on Friday afternoon 6 militants and 12 soldiers had been killed in the previous 24 hours.

The army said on Thursday an intense clash had erupted as soldiers advanced into the Langar Khel area and 14 militants and 5 soldiers were killed. Ten wounded soldiers later died, taking the toll from that clash to 15, the army said.

Stock investors have been rattled by insecurity and the main index has lost about 5 percent since the offensive began.

But the index ended 1.60 percent higher at 9,067.17 after the International Monetary Fund said the previous day the economy showed signs of recovery but risks remained.

Finance Minister Shaukat Tarin told Reuters the IMF had expressed concern about how insecurity could affect the economy.

(Additional reporting by Alamgir Bitani, Zeeshan Haider and Sahar Ahmed; Writing by Robert Birsel; Editing by Ron Popeski)