The rioters will be punished, said Prime Minister Deuba
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The Nepalese government says one of the bodies of 12 Nepalese hostages killed in Iraq has been recovered. It has pledged to retrieve all the bodies.
A curfew in the Nepalese capital, Kathmandu, was extended for a third day following riots over the killings.
The government has launched an inquiry into the violence in Kathmandu which left two dead and damaged buildings, including a mosque.
The foreign ministry has appealed to all Nepalese to leave Iraq.
Prayers at home
It is not clear how many Nepalese are still in Iraq, although the number is said to be in the thousands.
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This is the first time in my life when I saw such
protests. I hope we can hold our prayers in the mosque soon,
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Friday prayers in the Kathmandu's Jama mosque, which was damaged in the riots, were cancelled because of the curfew.
"We will hold our prayers in small groups in our homes,"
Arif Sheakh, a mosque management committee member, told
Reuters news agency earlier on Friday.
"This is the first time in my life when I saw such
protests. I hope we can hold our prayers in the mosque soon,"
Mr Sheakh said.
Extra security has been deployed outside mosques and other public buildings.
Punishment promised
A government spokesman has said that a retired supreme court justice, Top Bahadur Singh, will head a six-member inquiry committee into the riots.
The committee has been given a month's time to present its report.
It has been charged with identifying those behind the disturbances and recommending their punishment.
"What happened is a matter of great sorrow. We are investigating
and will punish those who were involved in this crime against this
historic mosque," said Prime Minister Sher Bahadur Deuba on a visit to the Jama mosque on Friday.
Flights cancelled
Several international airlines, including Pakistan International Airlines, Qatar Airways, Gulf Airways, and India's Jet Airways have cancelled scheduled flights to Kathmandu.
The bodies shown on an Islamic website
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Correspondents say Nepal has no history of violence against its Muslim minority.
Many blamed the government for doing little to free the hostages and there have been calls for the prime minister to step down.
The government rejected the criticism and has pressed the international community to hunt down the killers.
The government said it would take action against agencies illegally sending people to Iraq.
Nepal, one of the poorest countries in the world, has banned its citizens from going to Iraq, despite the relatively well-paid jobs there.