Gunmen free Pakistani school children, surrender

"All the children have been released and the criminals have surrendered to the jirga," said interior ministry spokesman Javel Iqbal Cheema. A jirga is a council of tribal elders. Cheema said none of the children were hurt.

Violence has spread across Pakistan in recent months, seeping out of remote tribal regions that are sanctuaries for al Qaeda and Taliban militants and into cities and towns, raising fears about the stability of the nuclear-armed U.S. ally.

Cheema said the gunmen were members of a kidnap gang but government officials and police had earlier said there were about seven Islamist militants holding the children in the school in Bannu town.

President Pervez Musharraf told a new conference in London the gunmen were "extremists".

The gunmen fled into the school in the town in North West Frontier Province and took the children hostage after they had kidnapped a health department official and his driver, police said.

Police chased the gunman and one militant was killed in a clash before the rest of them fled into the school, police said. The health official and his driver were freed.

Interior Minister Hamid Nawaz had said there were between 200 and 250 children in the school.

DECAPITATED POLICEMEN

Separately, the military said heavy fighting was going on between security forces and militants in two areas of South Waziristan on the Afghan border.

Security forces have this month been battling insurgents led by an al Qaeda-linked militant chief who the government said was behind the assassination last month of opposition leader Benazir Bhutto.

One soldier had been killed and nine wounded in the fighting on Monday, the military said.

More than 150 militants and 20 soldiers have been killed in the South Waziristan fighting this month.

In neighbouring North Waziristan, two soldiers were killed in a militant attack on a checkpost, while three policemen were killed in another attack in the Orakzai tribal region on Sunday night, intelligence officials said.

Authorities also found the bodies of two decapitated policemen in the scenic Swat valley, also in North West Frontier Province on Sunday night, officials there said.

Security forces began an offensive to clear hundreds of well-armed militants out of the valley in November.

Militant violence has surged since July, when the security forces stormed a radical Islamabad mosque where militants defying the government had amassed a large quantity of weapons.

Hundreds of people have been killed in a wave of attacks, including many suicide bombings, since then.

The United States, which is leading the battle against Taliban militants in neighbouring Afghanistan, is concerned about increasing al Qaeda and Taliban efforts to destabilise Pakistan.