Pakistani police and paramilitary troops were ordered on Friday to shoot on sight in its largest city Karachi after up to 70 people were killed in three days of ethnic and political violence.

Shops and fuel stations were shut and public transport idled after the city's dominant political party, the Muttahida Qaumi Movement (MQM), announced a day of mourning in response to the latest surge in violence in the country's financial and commercial hub.

'We have issued orders to the security forces to shoot anyone involved in violence on the spot,' Sharjeel Memon, the provincial information minister, told Reuters.

'In addition to the police and Rangers, another 1,000 personnel of the Frontier Constabulary will be deployed in the city to control the violence,' he said, referring to another paramilitary force.

Karachi police chief Saud Mirza said 63 people had died in the violence since Tuesday, with around 150 injured. Memon said 70 people had been killed in violence.

'Thirty-seven people were killed yesterday alone,' Memon said.

VIOLENCE SPREADING

Most of the casualties over the past three days were reported in the city's western Qasba Colony and adjoining areas -- a multi-ethnic, lower middle class neighborhood.

But slowly, trouble is spreading to other parts of the city.

Firing could be heard in several areas on Friday, and in some spots residents burned tires and threw stones at the few passing vehicles on the street.

Huddles of people waited in vain at bus stops for public transport that never came.

Most shops were closed, with corrugated steel shutters drawn against the violence outside. Every few kilometers, a small group of lightly armed police stood a wary watch, while rangers and cops in pickups patrolled the empty streets.

The stock market was open, but the main index was down 0.68 percent by midday (0700 GMT) in light trade.

'Not many people are willing to trade today and everyone is concerned about the situation in the city,' said Sajid Bhanji, a director at brokers Arif Habib Ltd.

'The stock market has also announced that the settlement of today's trades will be done on Monday, which shows they are worried about the situation.'

Karachi, home to more than 18 million people, has a long history of ethnic, religious and sectarian violence.

It was a main target of al Qaeda-linked militants after the September 11 2001 attacks on the United States, when Pakistan joined the U.S.-led campaign against militancy, and foreigners were attacked in the city several times.

A recent report from the Human Rights Commission of Pakistan said a total of 1,138 people were killed in Karachi in the first six months of 2011, of whom 490 were victims of political, ethnic and sectarian violence.

The latest surge in violence in the southern city came days after the MQM announced to quit the ruling coalition.

The MQM, which mostly represents the Mohajirs -- descendents of Urdu-speakers who migrated from India after the creation of Pakistan in 1947 -- and its rival, the ethnic Pashtun-based Awami National Party (ANP), are blamed for most of the violence, though both parties deny the charges.

'It's definitely a political and ethnic issue, and a strong political commitment would be needed to bring peace to the city,' said a senior security official, requesting not to be named.

'To open fire and kill a few miscreants may stop the violence for now, but in the long-run, a political resolution is a must, or else we will see another surge after a few days,' he said.

The U.S. Embassy in Islamabad released a statement from Ambassador Cameron Munter condemning the violence.

'We call on all parties to refrain from further violence and work toward a peaceful resolution of differences,' the statement read.

TROUBLING QUESTIONS

In some ways, Karachi raises more troubling questions over Pakistan's stability than the northwest border regions seen as a global hub for militants and a huge concern for the West.

As the commercial hub, any trouble could disturb industrial activity, and have serious consequences for the economy.

'If the government does not pay immediate attention to the worsening situation of Karachi, and does not stop the loss of innocent blood, we will shut down our business centers and industries,' Muhammad Saeed Shafiq, president of the Karachi Chamber of Commerce and Industry, said in a statement.

According to officials, Karachi contributes 68 per cent of the government's total revenue and 25 percent of gross domestic product (GDP).-Reuters