Assailants fired four rockets into a city in northwestern Pakistan before dawn on yesterday, killing 10 people and wounding 40, police said.
The attack comes amid an escalating confrontation between Islamic militants and the US-backed government of President General Pervez Musharraf.
A key Taliban leader killed himself with a hand grenade on Tuesday to avoid capture -- one of more than 300 people who have died in violence across the country this month.
The rockets hit two houses, a mosque and a shop in Bannu, a troubled city in North West Frontier Province, at about 2am, said Khwaja Mohammed, a city police official.
Police said 10 civilians were killed and that seven police officers were among 40 others wounded.
Mohammed described the attack as "terrorist activity," but said it was too early to say more about who was behind it.
Bannu and other cities in the northwest have suffered a string of shootings and bombings blamed on Taliban militants who have been expanding their influence from strongholds in the tribal belt along the Afghan border.
The attacks and a bloody army siege of Islamabad's radical Red Mosque earlier this month have raised concern that the Taliban's harsh interpretation of Islam could take hold in the country, particularly in North West Frontier Province, prompting Musharraf to send thousands of troops to the area.
Militants have killed dozens of soldiers with suicide attacks in North Waziristan, the tribal region closest to Bannu.
Yesterday, militants fired a rocket at a fort manned by paramilitary troops and blew up a government utility office in Miran Shan, the region's main town, forcing authorities to shutter all government offices and banks for fear of casualties, local security officials said.
A bomb also detonated in a government-run school in the nearby town of Mir Ali, local security officials said.
Authorities have imposed a nighttime ban on vehicle movements in the Mir Ali area, said the officials, who asked for anonymity because of the sensitive nature of their work.
The government had scored a victory on Tuesday, when Abdullah Mehsud, a Taliban veteran of Guantanamo Bay, who was one of Pakistan's most-wanted rebel leaders, killed himself with a hand grenade.
Security forces had surrounded Mehsud in a house in Zhob, a town in Pakistan's Baluchistan Province just south of his home in the South Waziristan region.
Intelligence officials said Mehsud was returning after more than a year spent leading Taliban campaigns against US and government troops in southern Afghanistan.
Mehsud was captured fighting with the Taliban in 2001 and incarcerated at Guantanamo Bay detention center in Cuba.
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