Bomb at Shi'ite procession in Pakistan kills 22

The assault on the religious march, the third in Pakistan's biggest city in as many days, underscored the multiple security challenges facing the country.

The nuclear-armed U.S. ally is struggling against al Qaeda-linked militants and is under mounting pressure from Washington to help stabilise neighbouring Afghanistan, where a Taliban insurgency is raging.

The bomb exploded on a main road during a procession for Ashura, the Shi'ite calendar's biggest event, despite the presence of thousands of security forces who had been on high alert.

We have reports of 22 dead and there are dozens of wounded in the blast but we are still in the process of counting, said Javed Hanif, a top city administration official.

Television pictures showed a big cloud of smoke over the scene and reporters said angry worshippers attacked journalists and police and set fire to shops and vehicles.

Karachi has a long history of ethnic and factional violence, although it has been spared the brunt of Taliban attacks over the past couple of years.

Karachi police chief Waseem Ahmed appealed for calm. He said the severed head of the suicide bomber had been found.

I was walking in front rows when the blast went off about 50 metres away and thick cloud of smoke immediately engulfed the entire spot, said witness Moin Rizvi.Ashura falls on the 10th day of a 40-day mourning period during the Islamic calendar's first month, Moharram, which commemorates the death of Imam Hussein, a grandson of the Prophet Mohammad, who was killed in battle in 680 AD in the Iraqi city of Kerbala.

Processions by minority Shi'ite Muslims in Pakistan are often attacked by majority Sunni Muslim militants.

Embattled Pakistani President Asif Ali Zardari has vowed to end the bloodshed. But militants have struck back with bombings in several cities since the army launched a major offensive in their stronghold of South Waziristan in mid-October.

U.S. PRESSURE

The United States says Pakistan must crack down harder on militants along the border who cross into Afghanistan and attack U.S.-led troops fighting the Taliban.

But Pakistan, which nurtured militants fighting Soviet occupation troops in Afghanistan in the 1980s, sees the Afghan Taliban as leverage against enemy India's influence in the country.

Pakistan's military is focussed on battling its homegrown Taliban who have extended their reach, as shown by a December 4 suicide and gun attack on a mosque near army headquarters.

Violence has intensified since July 2007, when the army cleared out militants from a radical mosque in Islamabad, and victims have included former prime minister Benazir Bhutto, who was killed in a suicide bomb and gun attack after returning home from self-imposed exile in December 2007.

The Taliban, who reject any ties with the United States and other Western power, are determined to impose their version of Islam, including public whippings and hangings for those who violate their rules.The International Monetary Fund last week issued a vote of confidence in Pakistan's economy -- in virtual recession -- by approving a $1.2 billion loan payment. That could ease some of the pressure on Zardari, Bhutto's widower, at least on one front.

Investors have factored in violence across the northwest in their trading but analysts have said trouble in Karachi could hurt equities.

Financial markets were closed on Monday for Ashura.

(Additional reporting by Augustine Anthony; Writing by Michael Georgy; Editing by Robert Birsel)