Pakistan's Musharraf calls for reconciliation

By Kamran Haider

ISLAMABAD (Reuters) - Pakistan's President Pervez Musharraf, under mounting pressure to resign, called on Thursday for political stability and reconciliation to tackle economic and security problems.

Musharraf, speaking in an televised Independence Day address, did not refer to a plan to impeach him drawn up by a coalition government led by the party of assassinated former Prime Minister Benazir Bhutto.

In his first public comments since the coalition announced its impeachment plan last week, the former army chief and firm U.S ally also did not refer to the calls for him to step down.

"If we want to put our economy on the right track and fight terrorism then we need political stability. Unless we bring political stability, I think we can't fight them properly," Musharraf said.

Musharraf has been at the centre of a political crisis since early last year that has heightened concerns in the United States and among its allies about the stability of Pakistan, a nuclear-armed Muslim state that is also a hiding place for al Qaeda leaders.

Speculation has been rife that Musharraf, who seized power in a 1999 coup, would quit rather than face impeachment, though his spokesman has consistently denied that.

"Political stability, in my view, can only be brought through a reconciliation approach as opposed to confrontation," Musharraf said. "Differences should be buried."

Coalition officials were not immediately available for comment but Musharraf's appeal would appear unlikely to check what they call a "tidal wave" of opposition to him.

A growing number of politicians, including some old allies, have been calling on him to face a vote of confidence or be impeached.

The showdown is unnerving investors, with the rupee setting a new low of around 75.05/15 to the dollar and stocks hovering near two-year lows. Referring to the rupee, Musharraf said the flight of capital had to be stopped.

BOMB IN LAHORE

Security worries are compounding the gloom.

Musharraf spoke just after midnight, when Pakistan marked the anniversary of its creation in 1947 upon the partition of British-ruled India.

Shortly before noisy celebrations began across the country, a suicide bomb attack on police killed seven people in the eastern city of Lahore, police said.

Hundreds of people, including many members of the security forces have been killed in a wave of attacks since last year.