(Adds comments from U.S. Secretary of State Rice) By Zeeshan Haider ISLAMABAD, Aug 18 (Reuters) - Pakistan's President Pervez Musharraf quit office on Monday to avoid impeachment charges, nearly nine years after the key U.S. ally in its campaign against terrorism took power in a coup. Speculation the former army chief would resign had mounted since the fractious coalition government, led by the party of assassinated former prime minister Benazir Bhutto, said this month it planned to impeach him. "Whether I win or lose, the nation will lose," Musharraf, 65, said of the impeachment process in an hour-long televised address in which he passionately defended his record. "The honour and dignity of the country will be affected and in my view, the honour of the office of president will also be affected." Prolonged jockeying and uncertainty over Musharraf's position had hurt financial markets in the nuclear-armed country of 165 million people, and raised concerns in Washington and elsewhere that it was distracting from efforts to tackle militancy. Coalition officials had said Musharraf sought immunity from prosecution but he said in his speech he was asking for nothing. "I don't want anything from anybody. I have no interest. I leave my future in the hands of the nation and people," he said. One main coalition party, that of former prime minister Nawaz Sharif whom Musharraf ousted in 1999, has insisted he face trial for treason. Bhutto's party says parliament should decide. Musharraf ended his final address as president with the words: "May God protect Pakistan, may God protect you all. Long live Pakistan forever." Pakistani stocks <.KSE> jumped 4 percent on the news and the rupee <PKR=>, which had lost a quarter of its value this year, began strengthening. "It eliminates all the uncertainty in the market," saidAsad Iqbal, managing director at Ismail Iqbal Securities. "The government will hopefully start concentrating on the economy ... they have no excuses now and they have to perform." Musharraf has been isolated since his allies lost parliamentary elections in February. But in his speech he defiantly lambasted the coalition for what he described as failed economic policies, and said he had brought prosperity. The powerful army, which has ruled for more than half the country's 61-year history, has publicly kept out of the controversy over its old boss, and no protests over the Musharraf decision were expected. Indeed, celebrations broke out across the country after the announcement, with people dancing and handing out sweets. "Thank God he's resigned. The country will do much better now," said Mohammad Ilyas, 30, in Karachi. "VICTORY FOR BENAZIR" The United States, apparently resigned to Musharraf's exit, had said Pakistan's leadership was a Pakistani issue. After the announcement, Secretary of State Condoleezza Rice said Washington would continue to help Pakistan fight extremism. The U.S. urged Pakistan's leaders "to redouble their focus on Pakistan's future and its most urgent needs, including stemming the growth of extremism, addressing food and energy shortages, and improving economic stability," Rice also said in a statement. She said Washington was grateful to Musharraf for joining the fight against al Qaeda, the Taliban and other extremists. Old rival India reacted cautiously. Foreign Minister Pranab Mukherjee told reporters: "India will continue to have an amicable relation with Pakistan in the days to come". Pakistan is committed to a peace process with India launched under Musharraf, but India fears a weak civilian government will not have his influence over the army and military spy agency, which India suspects has a hand in most attacks on its soil. The chairman of the Senate, Mohammadmian Soomro, will be acting president until a new one is elected within 30 days, but it is not clear who that will be. Traditionally, Pakistan's president has been a figurehead, although under Musharraf the office was much more powerful. Ruling coalition parties, which had prepared impeachment charges against Musharraf focusing on alleged violations of the constitution, welcomed the resignation. "It's victory for Benazir Bhutto and all those who sacrificed their lives for democracy," said a senior Bhutto party official. Bhutto was assassinated on Dec. 27 while campaigning. The government said an al Qaeda-linked militant was responsible. A career army officer, Musharraf narrowly survived several al Qaeda-inspired assassination attempts. Critics say he suffered from a "saviour complex" and believed he was indispensable. He promised to return Pakistan to democracy, but opponents say he stifled political freedom. As challenges mounted, Musharraf reverted to autocratic ways. His downfall will be traced back to March 9, 2007, when he tried to force Supreme Court Chief Justice Iftikhar Chaudhry to resign.
Kashmiri Muslims on bikes shout pro-freedom slogans during a march in Srinagar August 18, 2008. Tens of thousands of Muslims marched past the United Nations office in Indian Kashmir on Monday, ...
