A suicide bomber killed at least eight people and wounded 23 in an attack on police who had been guarding Islamists marking the anniversary of an army commando raid on Islamabad's Red Mosque.
The attack will raise questions about a new government's policy of trying to end militant violence through negotiations and increase concern about prospects for the country, a nuclear-armed U.S. ally making a transition to civilian rule.
President Pervez Musharraf, whose power has withered since his allies were defeated in a February election and who has been facing calls to step down, said on Friday more radical mosques would emerge if extremism and militancy were not tackled.
The former army chief ruled out resigning, saying he was needed to help politicians avoid an economic meltdown and tackle the militant threat.
The blast happened several hundred metres (yards) from the city-centre mosque, shortly after a tightly guarded meeting of Islamists there had ended.
Worshippers could be seen streaming out of the mosque after the explosion. Sirens were heard across the city as ambulances raced towards the scene on what had been a quiet evening.
There were conflicting casualty figures with several senior policemen and city officials saying more than 10 people had been killed. A security official said 12 people had been killed, all but one or two policemen.
But the Interior Ministry said eight people had been killed and 23 wounded.
"Police were going back to their stations when it happened," said senior police official Kamran Adil.
"The primary target was our men."
Body parts, pools of blood and police equipment littered the road and nearby walls were pocked by shrapnel.
The government's top Interior Ministry official, Rehman Malik, told reporters the bomb had been caused by a suicide bomber and police had found the upper part of his body.
The attack is likely to add to worry among stock investors, whose confidence has been undermined by political squabbling, insecurity and economic problems, including inflation running at more than 20 percent.
Stocks have been sliding and the rupee set a new low against the dollar last week.
