(Adds fresh violence, Bhutto heads to Dubai, court ruling delay)
By Mohsin Raza
SARGODHA, Pakistan, Nov 1 (Reuters) - A suicide bomber rammed an Air Force bus in Pakistan on Thursday killing 8 people while troops killed up to 70 militants in the northwest, as rumours swirled President Pervez Musharraf could invoke emergency rule.
Nearly 800 people have been killed in militant-linked violence and there have been more than 22 suicide attacks in the last four months, heightening concerns about the stability of nuclear-armed Pakistan at a time when U.S. ally General Musharraf is trying to engineer a transition to civilian-led democracy.
The second suicide attack this week targeted a bus taking personnel to an air base in Sargodha in the central province of Punjab, the military said.
"Eight people have been killed including four officers," military spokesman Major-General Waheed Arshad said, adding civilians were among those killed. An air force statement said 27 people were wounded.
Police said they had found the head of the suspected bomber, and circled blood stains on the road with white chalk and collected evidence. The handlebars of the motorbike used by the attacker lay on the tarmac.
Separately, troops killed up to 70 militants as fighting flared in the scenic Swat valley in North West Frontier Province, where more than 180 people have been killed since last week as the military battles a pro-Taliban movement seeking to impose strict Islamic code in the area.
Pakistani shares fell 2.7 percent on Thursday following the blast and as rising violence and political uncertainty worried investors ahead of an election due by January.
MUSHARRAF IN LIMBO
The Supreme Court on Thursday put back a ruling on whether General Musharraf's re-election by parliament on Oct. 6 was legitimate, adding to uncertainty. Rivals have challenged his right to have stood while still army chief.
The court said it would reconvene on Friday, and has scheduled the following session for Nov.12 -- just three days before Musharraf's term is due to expire.
He can still carry on as president so long as no-one else is sworn in, according to constitutional experts.
Government ministers have fuelled speculation Musharraf, who came to power in a coup eight years ago, could ditch plans for the election, and impose emergency powers or martial law if the case goes against him.
Musharraf has said he will quit the army if he gets a second five-year term, and has allowed opposition leader Benazir Bhutto to return from self-imposed exile without fear of prosecution from a raft of old graft charges against her.
Former prime minister Bhutto boarded a plane for Dubai on Thursday to visit her family, a day after she put off the trip citing fears Musharraf could impose emergency rule. A spokesman said she would be away for up to four days.
Pakistan has seen a surge in violence by militants linked to the Taliban and al Qaeda since the army stormed Red Mosque in the capital, Islamabad, to crush a Taliban-style movement in July.
Al Qaeda leaders Osama bin Laden and Ayman al-Zawahri, in audio and video tapes released in September, exhorted followers to wage war on Musharraf and Pakistan's security forces.
Seven people were killed in a suicide attack on Tuesday less than a kilometre from Musharraf's army residence in the garrison city of Rawalpindi, neighbouring Islamabad.
A suicide bomb attack killed 139 people at a rally in the city of Karachi on Oct. 19 to mark Bhutto's return. (Additional reporting by Kamran Haider, Zeeshan Haider and Augustine Anthony)
