ISLAMABAD President Pervez Musharraf, under mounting pressure to resign, called on Thursday for political stability and reconciliation to tackle economic and security problems.

Musharraf, speaking in a televised Independence Day address, did not refer to a plan to impeach him drawn up by a coalition government led by the party of assassinated former Prime Minister Benazir Bhutto.

In his first public comments since the coalition announced its impeachment plan last week, the former army chief and firm US ally also did not refer to the calls for him to step down.

'If we want to put our economy on the right track and fight terrorism then we need political stability. Unless we bring political stability, I think we cant fight them properly,' Musharraf said.

Speculation has been rife that Musharraf, who seized power in a 1999 coup, would quit rather than face impeachment, though his spokesman has consistently denied that.

'Political stability, in my view, can only be brought through a reconciliation approach as opposed to confrontation,' Musharraf said. 'Differences should be buried.'

Coalition officials were not immediately available for comment but Musharrafs appeal would appear unlikely to check what they call a 'tidal wave' of opposition to him.

A growing number of politicians, including some old allies, have been calling on him to face a vote of confidence or be impeached.

The showdown is unnerving investors, with the rupee setting a new low of around 75.05/15 to the dollar and stocks hovering near two-year lows. Referring to the rupee, Musharraf said the flight of capital had to be stopped.

As the pressure mounts on Musharraf a crucial question is how the army, which has ruled for more than half the countrys history, will react. Coalition leaders said on Tuesday the army would not intervene to back its old boss.

Army commander General Ashfaq Kayani, who Musharraf chose to succeed him when he gave up command last year, did not refer to the turmoil in an Independence Day address to cadets but said the army would 'always rise to the call of the nation.'

Coalition officials hope the president, isolated since his allies were routed in February elections, will resign before he is impeached. But they are drawing up a accusations against him.

Analysts say it could take weeks before a vote in the bicameral parliament.