Pakistan freezes militant funds

President Musharraf (l) promised action

Pakistan has frozen assets belonging to two militant groups, one of which is accused of involvement in the deadly suicide attack on India's parliament.

Lashkar's activities will now be totally confined to Kashmir

Lashkar-e-Toiba leader Hafiz Mohammad Saeed

Reports say the State Bank of Pakistan has closed the accounts of Ummah Tameer-e-Nau and Lashkar-e-Toiba, whose leader resigned after the announcement.

India blames Lashkar-e-Toiba and another group, Jaish-e-Mohammad, for the attack on the parliamentary complex in Delhi, which left 14 people dead.

Pakistan had promised to take action against the groups if there was sufficient proof, but refused an Indian demand to share evidence linking them to the attack.

Already strained relations between the two neighbours have deteriorated radically since then, leading to renewed firing across their common border in the disputed state of Kashmir.

But the BBC's Adam Mynott says the Pakistani move against separatist bank accounts will be welcomed by India and may help calm fears of an escalating conflict.

Symbolic order

The United States has already frozen the assets Lashkar-e-Toiba and Ummah Tameer-e-Nau groups, citing their alleged links with Osama Bin Laden's al-Qaeda network.

Reports of troop movements have added to the tension

Shortly after the Pakistani announcement, Lashkar-e-Toiba leader Hafiz Mohammad Saeed announced his resignation, saying he would now devote his time to preaching religion.

"Lashkar's activities will now be totally confined to Kashmir and we have already shifted all our offices to Kashmir last month," he told reporters in the eastern Pakistani city of Lahore.

He said the group had appointed a new commander to its militant wing, Maulana Abdul Wahid Kashmiri.

The group denies any involvement in the India parliament attack.

Speaking earlier at the end of a five-day visit to China, Pakistan's President Pervez Musharraf said he would take action against the groups.

"We are already taking measures to move against all groups that are involved in any form of terrorism everywhere in the world," he said.

The lesser known Ummah Tameer-e-Nau was founded by a retired nuclear scientist and is suspected of providing information on nuclear arms to Bin Laden.

Tit-for-tat

Islamabad strenuously denies Indian allegations that its intelligence services backed the militant attack on the Delhi parliament.

Civilians have been fleeing the renewed fighting

That did not stop Delhi from recalling its high commissioner in Islamabad and severing transport links between the two countries, moves described by President Musharraf as arrogant.

Pakistan also accuses India of kidnapping and torturing a staff member of its High Commission in Delhi.

The staffer, Mohammad Sharif Khan, was expelled from India on Monday for "engaging in activities beyond his legitimate sphere of activity".

Delhi police said at the weekend they had arrested an Indian parliamentary official for passing sensitive information to Mr Khan.

Pakistan has lodged an official protest, alleging that Mr Khan was "severely beaten and tortured" before his release and expulsion.

India has firmly denied mistreating the official.

Border clashes

Away from the diplomatic tit-for-tat, our correspondent says there has been more firing between Indian and Pakistani soldiers along the Kashmir border.

There have been exchanges of machine gun, artillery and mortar fire, while both countries have continued to strengthen their forces along Kashmir's so-called Line of Control.

Indian defence officials told the Reuters news agency that several Pakistani bunkers had been destroyed.

India said at the weekend two of its border guards had been killed by Pakistani troops in a clash in Kashmir.

An Indian spokesman said the soldiers were attacked while on patrol about 40 kilometres south-west of the city of Jammu.

Reports on Sunday spoke of heavy, sustained shelling between Indian and Pakistani troops in the area.

Indian Defence Minister George Fernandes was reported as saying that Indian troops were on a very high state of alert.

But he indicated he was optimistic that a serious military conflict would not start between the two countries if Pakistan handed over those responsible for the parliament attack.