Pakistan's Musharraf defies resignation calls

By Aftab Borka

KARACHI, July 4 (Reuters) - Pakistani President Pervez Musharraf hit back at calls for his resignation on Friday, saying he was needed to help political parties avoid an economic meltdown and tackle a militant threat gripping the country.

"We cannot address the problems of terrorism and extremism and the economic crisis if there is no political stability," Musharraf told businessmen in Karachi in his first public address since his allies lost an election last February.

The key U.S. ally in the war on terrorism lost parliamentary support, but the Bush administration has voiced support for Musharraf, who came to power as a general in a coup in 1999.

During a visit to Pakistan earlier this week, U.S. Assistant Secretary of State Richard Boucher urged parties to focus on these challenges rather than be drawn into a fight to drive Musharraf from office.

Asif Ali Zardari, widower of assassinated two time prime minister Benazir Bhutto, led the Pakistan People's party (PPP) to victory in the polls.

The PPP formed a coalition with three other parties including the runner up led by Nawaz Sharif, the prime minister Musharraf overthrew.

Sharif pulled his party out of the government in May, after Zardari reneged on a commitment to swiftly reinstate Supreme Court judges who Musharraf had dismissed.

The judges could revive a case challenging the legitimacy of Musharraf's re-election by the previous parliament last October.