DHAKA (Reuters) - Bangladesh Prime Minister Sheikh Hasina drew praise on Friday for bringing a swift end to a mutiny by paramilitary troops who slaughtered scores of their officers, with bodies found in a mass grave pushing the death toll past 70.

The mutiny was the first major test of Hasina -- who investors and foreign donors had hoped would bring stability to Bangladesh -- since she took office last month after two years of emergency rule by an army-backed government.

Premier Hasina has tackled a huge problem efficiently and saved the nation from what could be a disaster. She has proved her resolve, personal credibility and leadership, said retired major-general Syed Mohammad Ibrahim, a defense analyst.

The mutiny in Dhaka ended late on Thursday after the rebels handed over their weapons following an amnesty offer and an appeal by Hasina to return to the barracks.

On Wednesday disgruntled Bangladesh Rifles (BDR) border guard troops opened fire on their officers, drawn from the regular army, at a meeting over pay and command disputes.

A fire service official who declined to be named said more than 50 bodies had been recovered from the BDR headquarters complex on Friday, which would take the death toll to more than 70, mostly BDR officers but including at least four civilians.

Estimates of the dead have varied widely since a government minister put the figure at 50 on Wednesday. It could eventually climb past 100 as scores of BDR officers are still missing.

One official who declined to be named said about 40 bodies were found in a mass grave.

Bodies have been stuffed into manholes, thrown into ponds and tanks, while those alive were hiding even in dirty sewer drains, said Atiqul Islam, a Dhaka University student who had a relative among the dead.

Among the dead was the chief of the paramilitary force, Major-General Shakil Ahmed. On Friday the government named Brigadier-General Moinul Hossain as his successor.

BACK TO BASES

BDR troopers who took to the streets in more than a dozen other places around the country were back in their bases on Friday, officials and witnesses said.

Life has returned to normal and people are going about their business as usual, said a Reuters reporter in one of the affected towns, Sylhet in the northeast.

Activity on the streets also appeared normal in the capital Dhaka, where soldiers were searching the BDR headquarters for bodies, missing people and weapons. The government has declared Saturday and Sunday as national days of mourning.

Lieutenant-Colonel Syed Kamruzzaman, a survivor, said the attack was pre-planned and executed when ... officers arrived in Dhaka from around the country for the BDR meeting. He said he saw BDR chief Ahmed shot and killed.

The BDR's officers are traditionally seconded from regular army units, an arrangement resented by some BDR troops who want their own officer corps. A pay dispute made matters worse.

Though short-lived, the mutiny underscored the challenges facing Hasina, whose party won December parliamentary elections.

Hasina badly needs to show she can bring stability to Bangladesh and persuade foreign investors and aid donors to help develop the country, 40 percent of whose people live in poverty and which has a history of political turmoil and violence.

Newspapers praised her performance, although one suggested she should have consulted with the opposition during the crisis, not just the partners in her ruling coalition.

Hasina had said she would consider the BDR mutineers' demands but was vague about which she might meet and how soon. Conceding too much could anger the army or risk encouraging others to use violence to get what they want.

The BDR mutiny amounted to a national security breach ... It may have a destabilizing effect on other security institutions and may also destabilize the country, Ataur Rahman, a Dhaka University professor, told Reuters.

Hasina visited victims in hospital on Friday and appeared to take a tougher line on the mutineers. They committed a heinous crime. Such acts cannot be condoned, she said.

(For related Q&A see [nDHA361689])

(Additional reporting by Ruma Paul, Nizam Ahmed and Azad Majumder; Writing by Jerry Norton; Editing by Paul Tait)

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