Several thousand mourners attended funerals yesterday for victims of a suicide bombing that killed 43 people in Pakistan's commercial capital, an emotional reminder of a raging Taliban insurgency.

Coffins were carried through throngs paying their respects to people blown up on Monday at a procession at the climax of Ashura, one of the most important events in the Shi'ite calendar.

Earlier, Pakistan's Interior Minister appealed for calm in Pakistan's biggest city Karachi, where shop owners surveyed gutted premises a day after the attack triggered a city-centre riot.

The bombing underscored multiple security challenges facing nuclear-armed US ally Pakistan at a volatile time for President Asif Ali Zardari, who could be weakened further if corruption charges against his close aides are revived.

His political troubles are accompanied by heavy pressure from Washington to root out militants it says use sanctuaries in Pakistan to cross over and attack US-led troops in Afghanistan.

The government launched a security crackdown last October against al Qaeda-linked Taliban militants in their tribal strongholds in northwest Pakistan and retaliatory bombings since have killed hundreds of people across the country.

Although the government blamed militants for the Karachi attack - the third in as many days - some mourners expressed disbelief that fellow Muslims were capable of such carnage.

"I am one hundred percent sure that the United States and its agents are behind this attack, and all other such attacks in the country," said Syed Kausar Hussain Zaidi, a Shi'ite lawyer. "There aim is to destabilise Pakistan. The so-called religious extremists spreading this terror are nothing but US puppets."

The attack in Pakistan's biggest city may have been a bid to ignite sectarian bloodshed to create new security crises.

Pakistani security forces patrolled nearly empty streets.

"I appeal to the people of Karachi to stay peaceful. This is the economic hub of Pakistan," Interior Minister Rehman Malik told reporters after attending the funeral of a paramilitary soldier who authorities said pounced on the suicide bomber.

Mourners expressed anger, shouting confusing slogans.

"Down with America. Down with the Taliban. Down with Israel."

Religious scholars urged people to remain peaceful.

The provincial government declared a public holiday. Public transport was out of service and most shops were shut.

"Our office and the whole building is completely burnt. Everything has been destroyed," said Saleem Khan, who runs a car rental business along what is normally a busy road.

Karachi police chief Waseem Ahmed told Reuters initial investigations showed the suicide bomber was aged between 18 and 20, and that he used 8-9 kg of explosives. He said at least 500 shops had been set ablaze.

"It is clear that the terrorists are very well organised. They want to destabilise the country," said Anjum Naqvi, who was part of the bombed procession.

Provincial health secretary Hashim Raza Zaidi said the death toll had risen to 43, while 52 people were still in hospitals.

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