Bomber kills 10 in Pakistan as army battles Taliban

By Mohammad Hashim

PESHAWAR, Pakistan (Reuters) - Pakistan's army pressed on with an offensive against the Taliban on Monday as the government said 700 militants had been killed and a suicide bomber killed 10 people at a security checkpost.

The offensive in the Swat valley, 130 km (80 miles) northwest of Islamabad, is seen as test of the government's resolve to get to grips with an intensifying Taliban insurgency and comes after the United States accused it of "abdicating" to the militants.

The fighting has sparked a civilian exodus from the former tourist valley, raising fears of a humanitarian crisis.

At least 360,000 people have left their homes in recent days and in all about 500,000 are expected to flee.

They join about 600,000 people displaced earlier from Swat and other areas because of fighting since August, raising fears of a long-term problem for a country already being propped up by a $7.6 billion International Monetary Fund loan.

"This will not be over next week or in two weeks. We're looking at a protracted displacement crisis," Manuel Bessler, head of the U.N. Office for the Coordination of Humanitarian Affairs, told Reuters.

Prime Minister Yusuf Raza Gilani told the National Assembly the government would organise a conference of aid donors to marshal funds for the displaced.

The army launched a full-scale offensive in Swat on Thursday after a peace pact broke down and the government ordered troops to eliminate the militants.