Her killing after an election rally in the city of Rawalpindi triggered a wave of violence, especially in her native Sindh province, and could lead to the postponement of January 8 polls meant to return Pakistan to civilian-led democracy. Bhutto, 54, had hoped the huge popular following she enjoyed among the Pakistani poor would propel her to power for the third time as prime minister in an election meant to stabilize a country racked by Islamist violence. But as she left the rally, where she spoke of threats to her life, she stood up to wave to supporters from the sun-roof of her bullet-proof vehicle. The attacker fired shots at her before blowing himself up, police and witnesses said. She was pronounced dead in hospital in Rawalpindi, the home of the Pakistan army and the same city where her father, former prime minister Zulfikar Ali Bhutto, was hanged in 1979 after being deposed by a military coup. "It is the act of those who want Pakistan to disintegrate," said Farzana Raja, a senior official from Bhutto`s Pakistan People`s Party. "They have finished the Bhutto family." Bhutto`s body was flown to Sindh for burial in her family graveyard alongside her father in the village of Garhi Khuda Baksh. Bhutto`s husband, Asif Ali Zardari, arrived from Dubai with their three children to accompany the body. Party officials said the funeral would be on Friday. Across Pakistan, a country used to political violence and ruled by the military for more than half of its life, friends and foes alike were stunned by the death of a woman many had once criticized as a feudal leader buoyed by popular support while enjoying the riches of the family dynasty. Former prime minister, Nawaz Sharif, Bhutto`s old political rival, said his party would boycott the election. He blamed President Pervez Musharraf, who seized power in a military coup in 1999 but has since stepped down from the army, for creating instability. "Free elections are not possible ... Musharraf is the root cause of all problems," he said. Musharraf imposed a state of emergency in November in what was seen as an attempt to stop the judiciary from vetoing his re-election as president. He lifted emergency rule this month. VIOLENT PROTESTS In Karachi, the volatile capital of Bhutto`s home province of Sindh, thousands poured on to the streets to protest. Violence eased towards midnight after dozens of vehicles and several buildings were torched. Police said there were no casualties, but the central bank and all schools would be closed for three days of mourning. Gold and government bond prices rose and U.S. stocks slid on Thursday as fears of regional instability following the assassination triggered demand for safe-haven assets. Asian stocks were expected to fall on Friday. The United States, which relies on Pakistan as an ally against al Qaeda and the Taliban in neighboring Afghanistan, had championed the Oxford- and Harvard-educated Bhutto, seeing in her the best hope of a return to democracy. "The United States strongly condemns this cowardly act by murderous extremists who are trying to undermine Pakistan`s democracy," President George W. Bush said in a statement. Bush telephoned Musharraf and urged Pakistanis to honor Bhutto`s memory by continuing with the democratic process. The U.N. Security Council denounced the assassination as a "heinous act of terrorism." Analysts said Bhutto`s death, which followed a wave of suicide attacks and the worsening of an Islamist insurgency, could make it impossible to go ahead with the election. "I think there is a very real possibility that Musharraf will decide that the situation has got out of control and that he needs to impose emergency rule again," said Farzana Shaikh from the Chatham House analysis group in London. MOURNING Al Qaeda was the chief suspect in the murder, standing to gain by preserving its remote stronghold, undermining Musharraf and destabilizing the country, U.S. government and private analysts said. "There are a number of extremist groups within Pakistan that could have carried out the attack. ... Al Qaeda has got to be one of the groups at the top of this list," a U.S. official said. A private analyst said al Qaeda supporters in Pakistan`s security services may have also played a role, but it was unlikely Musharraf himself was involved. Musharraf condemned the attack and called for calm. "We will not sit and rest until we get rid of these terrorists, root them out," he said. He declared three days of mourning, but made no mention of the election. Police said 16 people had been killed in the attack. Bhutto aide Makhdoom Amin Fahim said that as Bhutto was leaving the rally she stood up from the sun-roof of her vehicle to greet supporters. "Had she not stood outside, she would have not been killed." It was the second attack on Bhutto in under three months. A suicide bomber killed about 140 people as she paraded through Karachi on her return from eight years in exile in October. On Thursday, Bhutto had told of the risks she faced. "I put my life in danger and came here because I feel this country is in danger. People are worried. We will bring the country out of this crisis," she told the Rawalpindi rally. Bhutto became the first democratically elected female prime minister in the Muslim world in 1988 at the age of 35. She was deposed in 1990, re-elected in 1993, and ousted again in 1996 amid charges of corruption she said were politically motivated. Along with her husband, she is survived by a son Bilawal, 19, and two daughters, Bakhtawar, 17 and Aseefa, 14.