(Releads, Taliban leader threatens to strike back)

By Faris Ali

PESHAWAR, Pakistan, June 28 (Reuters) - Pakistani security forces launched an offensive against Taliban fighters near the northwestern city of Peshawar on Saturday, prompting a militant commander to suspend peace talks and threaten country-wide retaliation.

The crackdown in Khyber tribal region followed a series of sorties by Taliban fighters into Peshawar to intimidate people into observing their puritanical interpretation of Islamic law.

"There has been no resistance, so far. No casualties, so far," Malik Naveed Khan, the police chief of North West Frontier Province (NWFP) told Reuters.

Residents had begun to fear that Peshawar could fall into the clutches of the Taliban, even though the main army garrison for the entire northwest is located in the city of three million.

A security official said the operation was focused on Bara town, around 5 kilometres west of Peshawar, and a resident told Reuters that paramilitary troops had fired at least three mortar rounds into the surrounding hills.

"The Frontier Corps has destroyed eight bases of the miscreants in Bara," the official said, adding that he had no reports of casualties so far.

Security experts said the appearance of the Taliban in Peshawar, just two hours drive west of the capital Islamabad, reflected the military and political failure to halt an Islamist tide rolling in from tribal areas that have become strongholds for the Taliban and al Qaeda.

Pakistani Taliban leader Baitullah Mehsud, based in the most remote tribal region, South Waziristan, telephoned a Reuters correspondent to declare that he was suspending peace talks.

"The talks will remain suspended until the government stops talking about operations and attacks against us," he said by satellite phone from an undisclosed location.

Mehsud voiced apprehension that the action in Khyber was just the first of several operations planned against Taliban groups in various parts of the northwest, and he threatened retaliation across Pakistan unless the offensives stopped.

"I am warning that the fire will not only burn in tribal areas and Frontier Province, it will engulf Punjab and Sindh also," Mehsud said.

CURFEW

In Peshawar, paramilitary soldiers set up bunkers in Hayatabad, a neighbourhood close to Khyber, and patrolled the streets in vehicles mounted with machine guns.

Roads in and out of nearby Bara were closed, and a curfew ordered.

"People are very scared," Fawad Khan, a resident, told Reuters by telephone, describing how the explosions of mortar shells echoed in the hills around.

The historic Khyber Pass provides the main road link to Afghanistan, and the region has long been known as a den for smugglers and criminals.

Islamist militants have become active in Khyber over the past year, and in recent weeks they began roaming into some neighbourhoods of Peshawar.

Riding in on the back of pick-up trucks, fighters armed with Kalashnikovs have threatened owners of music and video shops to close down, and ordered barbers to stop shaving men's beards.

Last Saturday, they also kidnapped 25 Christians, though they released them 12 hours later. (Writing by Zeeshan Haider; Editing by Simon Cameron-Moore and Sanjeev Miglani)

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