(Adds Boucher comments on Korean hostages, edits)

By Caren Bohan

WASHINGTON, Aug 2 (Reuters) - The resurgence of al Qaeda and the Taliban looms over next week's talks between U.S. President George W. Bush and Afghan President Hamid Karzai on shoring up troubled efforts to stabilize the war-torn country.

Lending a higher profile to the two-day summit, the talks will be held at the Camp David retreat in Maryland's mountains, a venue the U.S. president reserves for many of his most important meetings.

Violence in Afghanistan over the past 18 months has surged to its worst level since the overthrow of the Taliban in 2001.

Karzai's government has been grappling with high civilian casualties amid intense battles by U.S. and NATO-led forces against militants. He is also contending with the crisis of 23 Korean hostages seized two weeks ago by the Taliban and the killings of two of those captives.

In a country with a history of tribal and clan divisions, Karzai has been dealt a weak hand and one goal of the summit will be to bolster the Afghan leader, said James Lindsay, a former foreign policy aide in the Clinton administration.

"The key here is again to signal support for Karzai and his efforts to create a stable government in Afghanistan," said Lindsay, who is now with the University of Texas, Austin.

"It is also aimed at sending a message to a variety of quarters that the administration has not forgotten about Afghanistan," he added.

Karzai enjoys strong support not only from Bush but also from the U.S. Congress.

"He has a big fan club in Washington. He is a man of impressive and good character," said Teresita Schaffer, an analyst with the Center for Strategy and International Studies. "The problem is he has got an impossible job."

White House National Security Council spokesman Gordon Johndroe said Bush feels Karzai has "taken the right steps" to deal with the challenges he is facing.

U.S. SAYS OPTIONS OPEN ON HOSTAGE CRISIS

As U.S. officials underscored their support for Karzai, they also pledged to do all they could to try to persuade the Taliban to release the Korean hostages.

"All pressures need to be applied to the Taliban to get them to release these hostages," said Richard Boucher, assistant secretary of state for South and Central Asia.

Asked to elaborate on what forms of pressure, he declined to give details, but said: "There are things that we say, things that others say, things that are done and said within Afghan society as well as potential military pressures."

Bush's meeting with Karzai comes just a few weeks before the sixth anniversary of the Sept. 11 attacks and as Bush has tried to hammer home his commitment to fighting al Qaeda, in particular by emphasizing the role of al Qaeda in Iraq in fueling sectarian violence there.

Bush's critics say the Iraq war has diverted resources from the effort to combat the Taliban and al Qaeda and rebuild Afghanistan.

A U.S. intelligence report warning of renewed threat to the United States from al Qaeda has heightened the criticism and brought reminders of the failure to capture Osama bin Laden.

It cast a spotlight on the lawless tribal region of Pakistan along the Afghanistan border seen as haven for bin Laden's group and the Taliban.

The strengthening of the militant groups in the rugged Waziristan area is a topic Karzai will want to discuss.

Last September, as he met in Washington with Bush and Pakistani President Pervez Musharraf, Karzai raised concern about a truce Musharraf struck with tribal leaders there.

The White House has acknowledged the strategy of pursuing the peace agreement had failed and U.S. officials have pressured Musharraf to be more aggressive in tackling the tribal-area problem.

But Bush has remained supportive of Musharraf, who is facing challenges to his leadership at home but is viewed by the White House as a crucial ally.

(Additional reporting by Paul Eckert)

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