A suicide bomber struck a rally in the Pakistani city of Quetta on Friday, killing at least 54 people in the second major attack this week, piling pressure on a U.S.-backed government overwhelmed by a flood crisis.

Pakistan's Taliban claimed responsibility for the blast and said it would launch attacks in the United States and Europe very soon, repeating a threat to strike Western targets in response to drone attacks that have targeted its leadership.

The Quetta attack on a Shi'ite rally expressing solidarity with the Palestinian people came as the United States said the devastating floods were likely to hold up army offensives against Taliban insurgents.

Unfortunately the flooding in Pakistan is probably going to delay any operations by the Pakistani army in North Waziristan for some period of time, U.S. Defence Secretary Robert Gates said in Afghanistan where he is visiting U.S. troops.

Senior police official Hamid Shakeel told Reuters that at least 54 people were killed and about 160 wounded in Quetta.

Dozens of dead and wounded lay in pools of blood after the blast that also engulfed vehicles in flames.

Hours later, the al Qaeda-linked Taliban took responsibility for the attack, saying it was revenge for killings of radical Sunni clerics by Shi'ites, further challenging the unpopular civilian government.

We take pride in taking responsibility for the Quetta attack, Qari Hussain Mehsud, a senior Pakistani Taliban and mentor of suicide bombers, told Reuters.

Earlier in the day, the Taliban also claimed responsibility for bombings on Wednesday at a Shi'ite procession in the eastern city of Lahore in which at least 33 people died. These blasts were the first major attack since flood waters tore through the country. The Taliban and their allies often target religious minorities in a campaign to destabilise the government.

ATTACK THREAT

Aside from its battles against homegrown Taliban, Pakistan is under intense American pressure to tackle Afghan Taliban fighters who cross the border into Pakistan's lawless tribal areas to attack U.S.-led NATO troops.

The United States has stepped up missile strikes by pilotless drone aircraft against militant targets in Pakistan's Pashtun tribal lands since the start of 2010. On Friday, U.S. drones fired missiles at two targets in North Waziristan tribal region, killing seven militants, including two foreigners, intelligence officials said.

Pakistan's Taliban has responded to drone attacks by saying it would strike Western targets. Mehsud told Reuters on Friday the group planned attacks outside the country.

We will launch attacks in America and Europe very soon, he said by telephone from an undisclosed location.

The group claimed responsibility for a failed bomb plot in New York's Times Square in May and in December 2009, a Spanish court jailed 10 Pakistanis and an Indian for attempted suicide bombings on Barcelona's metro in 2008, saying the group had been inspired by the Pakistan Taliban's then leader.

There was no immediate response from U.S. or European officials to the latest threat by the group, though one analyst said it appeared to be largely opportunistic propaganda.

We know that in the past they have threatened attacks in the U.S. and all kinds of things which at the time we thought were rubbish but then the Times Square bomb attempt happened, said Anna Murison, Head of Global Jihad Forecasting at London's Exclusive Analysis risk consultancy.

So I wouldn't rule it out that they have got something in the pipeline. But I think it's more likely to be a marketing attempt, grabbing the headlines, trying to take advantage of the fact that the government's on the back foot (with the floods).

Earlier this week U.S. prosecutors charged the group's current leader, Hakimullah Mehsud, with plotting a bombing that killed seven CIA employees at an American base in Afghanistan last December.

Pakistan has said the army would decide when to carry out a full-fledged assault in North Waziristan, where Washington says anti-American militants enjoy safe havens.

In another attack in the northwest, a suicide bomber killed one person outside a mosque of the Ahmadi sect, who consider themselves Muslims but whom Pakistan declares non-Muslims.

ECONOMIC CRISIS

Islamist charities, some of them linked to militant groups, have joined in the relief effort for the millions affected by the worst floods in the nation's history. U.S. officials are concerned that the involvement of hardline groups in flood relief will undermine the fight against militancy.

Anger is spreading over the government's sluggish response to the floods, raising the possibility of social unrest.

Pakistan is also facing economic catastrophe, with the floods causing damage the government has estimated at $43 billion, almost a quarter of the south Asian nation's 2009 GDP.

The International Monetary Fund (IMF) will give Pakistan $450 million in emergency flood aid and disburse funds in September to help the economy cope with the devastation.

Talks in Washington with a delegation led by Pakistan's Finance Minister Abdul Hafeez Shaikh on the terms of an $11 billion IMF loan programme left him satisfied with the country's commitment to reforms, IMF chief Dominique Strauss-Kahn said.

Under the 2008 IMF loan programme, Islamabad promised to implement tax and energy sector reforms and give full autonomy to the State Bank of Pakistan.

(Additional reporting by Saud Mehsud, Haji Mujtaba, Zeeshan Haider and Augustine Anthony: Writing by Michael Georgy; editing by Jon Boyle)

Pakistan