Three bombs exploded at a Shi'ite procession in the Pakistani city of Lahore on Wednesday, killing at least 20 people and wounding over 170, piling pressure on a government already overwhelmed by floods.

Police said two suicide bombers blew themselves up in a crowd, after a lull in violence during the floods, the type of attack that Pakistani Taliban militants have claimed in the past.

Sajjad Bhutta, a senior Lahore official, told Reuters the death toll had climbed to 20, with at least 170 wounded. Rescue services said 25 were killed.

Separately, the U.S. Justice Department said prosecutors had charged the leader of the al Qaeda-linked Pakistani Taliban, Hakimullah Mehsud, for the plot that killed seven CIA employees at an American base in Afghanistan last December.

Mehsud, believed to be in the tribal areas of Pakistan, was accused of conspiracy to kill Americans overseas and conspiracy to use a weapon of mass destruction, the Justice Department said. The charges confirm Pakistan's Taliban insurgents have extended their reach overseas.

Soon after the Lahore blasts, a mob set fire to a police station. People also beat policemen, witnesses said.

Pro-Taliban Sunni militants frequently attack Shi'ites as part of a campaign to destabilise the U.S.-backed government.

The renewed violence came as millions of Pakistanis continued to struggle for food and water more than a month after the worst floods in the country's history, deepening concerns over the stability of the country.

The floods have ravaged Pakistan's economy, Prime Minister Yusuf Raza Gilani said, with massive job losses and soaring inflation expected to hurt a nation whose stability is vital to the U.S. war against militants in both Pakistan and Afghanistan.

The floods have inflicted damage to the economy which may, by some estimates, reach $43 billion (£27.8 billion), while affecting 30 percent of all agricultural land, Gilani said briefing the cabinet.

Agriculture is the mainstay of the economy, with cotton the main cash crop. The sector is a major source of employment.

Facing the prospect of long-term economic pain, Pakistan hopes the International Monetary Fund (IMF) will soften the terms of an $11 billion loan. Pakistani and IMF officials are meeting in Washington to work out the impact of the floods.

This economic loss will translate into massive job losses affecting incomes of thousands of families, which may have serious social implications, said Gilani, whose government was heavily criticised for its slow response to the catastrophe.

Pakistan's military has taken charge of relief efforts, but Islamist charities, some linked to militant groups, have also stepped in, raising concerns they may exploit public anger.

BLACKLIST

The United States on Wednesday formally added Mehsud's Tehrik-e-Taliban Pakistan, or Taliban Movement of Pakistan, to its blacklist of foreign terrorist organisations subject to travel and economic sanctions.

The TTP is the main Pakistani militant alliance which operates from Pakistan's northwest. It is suspected of being behind most bomb and suicide attacks across Pakistan.

Before the floods struck a vast swath of the country, the army said it had scored major gains against the Taliban. In renewed air strikes in the northwest, Pakistani forces killed up to 62 militants, their family members and other civilians with no ties to the fighters, officials said on Wednesday.

Washington has repeatedly urged Pakistan to go after militant sanctuaries in the northwest saying these have helped boost the Afghan insurgency, now at its deadliest. Pakistan says it is doing all it can to fight the militants.

Testing ties further, Pakistan's army said on Wednesday it scrapped talks with U.S. military officials after a military delegation sent to Washington had to go through unwarranted airport security checks.

British Deputy Prime Minister Nick Clegg said it could take Pakistan years to recover from the floods with threats from water-borne disease and opportunistic militants. The danger always is that you get groups who have an ulterior motive who provide aid to try to curry favour, he said after visiting an aid camp.

(Additional reporting by Zeeshan Haider and Augustine Anthony in Islamabad and Chris Allbritton and Rebecca Conway in Pabbi, Svetlana Kovalyova in Milan and Andrew Quinn and Jeremy Pelofsky,in Washington; Writing by Michael Georgy; editing by Noah Barkin)