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By Syed Raza Hassan
ISLAMABAD, June 9 (Reuters) - Taliban militants disguised as security forces stormed Pakistan's busiest airport on Sunday and at least 27 people were killed in a night-long battle at one of the country's most high-profile targets.
The assault on Jinnah International Airport in Karachi, Pakistan's sprawling commercial hub of 18 million people, all but destroys prospects for peace talks between the Pakistani Taliban and the government of Prime Minister Nawaz Sharif.
It also deals a heavy blow to Sharif's efforts to attract foreign investors to revive economic growth and raises questions about security at the country's main installations.
The attack began just before midnight when 10 gunmen wearing military uniforms and armed with automatic rifles and rocket-propelled grenades shot their way into the airport's old terminal, which is used mainly for charter and executive flights.
Gun battles raged through the night until security forces regained control of the airport at dawn. Passengers were evacuated and all flights were diverted.
Director general of the military's media wing, Asim Bajwa, said the airport had been cleared and would soon resume operations. The government said security was being stepped up at all airports.
"We need to keep extremely vigilant," Shujaat Azeem, special assistant to Sharif on aviation, said in a statement.
The Pakistani Taliban, an alliance of insurgent groups fighting to topple the government and set up a sharia state, claimed responsibility, saying it was in response to army attacks on their strongholds along the Afghan border.
"It is a message to the Pakistan government that we are still alive to react over the killings of innocent people in bomb attacks on their villages," said Shahidullah Shahid, a Taliban spokesman.
Pakistan's paramilitary force said that the attackers were ethnic Uzbeks. Pakistani officials often blame foreign militants holed up in lawless areas on the Afghan border for staging attacks alongside the Pakistani Taliban around the country.
"Three militants blew themselves up and seven were killed by security forces," Rizwan Akhtar, the regional head of the paramilitary Rangers, said in televised remarks. "The militants appear to be Uzbek."
The death toll included airport security guards and workers with Pakistan International Airlines.
Sharif came to power last year promising to find a negotiated solution to years of violence but after the latest attack the resumption of the peace process looked unlikely.
Karachi is Pakistan's biggest city and commercial hub, home to a vibrant stock exchange, the central bank and the country's main port. But it is also a violent and chaotic place where Taliban militants and criminal gangs operate freely underground.
At the airport, gun battles went on for five hours and television pictures showed fire raging as ambulances ferried casualties away.
At least three loud explosions were heard as militants wearing suicide vests blew themselves up.
By dawn on Monday, the army said the airport had been secured but heavy smoke rose above the building.
"Ten militants aged between 20 and 25 have been killed by security forces," said a spokesman for the Rangers. "A large cache of arms and ammunition has been recovered from the militants."
"A sweep operation is being carried out at the airport which is expected to be completed by midday (0700 GMT)."
Officials said no aircraft had been damaged.
Peace talks between the government and the Pakistani Taliban had failed in recent months, already dampening hopes of reaching a negotiated settlement with the insurgents, who continue attacks against government and security targets.
Pakistan's Taliban are allied with but separate from the Afghan Taliban. (Writing by Maria Golovnina; Editing by Robert Birsel)