President Asif Ali Zardari called for national reconciliation in a Pakistan Day message on Monday, as he sought to mend fences with the opposition after defusing a political crisis by restoring the country's top judge.

The reinstatement of Iftikhar Chaudhry as Supreme Court chief justice a week ago averted a looming violent street confrontation.

But tension has lingered between Zardari's party and its main rival, the party of former prime minister and opposition leader Nawaz Sharif, in particular over control of Punjab, Pakistan's most populous and most politically influential province.

Pakistan's Western allies fear political upheaval distracts the nuclear-armed country, a key U.S. ally, from fighting spreading Islamist militancy and reviving its flagging economy.

On this day I urge everyone to work in the spirit of tolerance, mutual accommodation and respect for dissent and invite every one to participate in the national effort for ... reconciliation and healing the wounds, Zardari said.

Zardari, whose party heads a civilian government that came to power a year ago after eight years of military rule, said the rule of law and constitutionalism had at times been trampled by dictators, a cycle that he said had to come to an end.

The restoration of Chaudhry and other judges had raised the expectation of the people that the cycle was ending, he said.

On Sunday, Zardari, the widower of assassinated former prime minister Benazir Bhutto, delivered a message of reconciliation to Sharif through Prime Minister Yousaf Raza Gilani.

Sharif welcomed the call, saying reconciliation was the need of the time.

DIVISIVE ISSUES

Despite that, potentially divisive issues remain including the question of Sharif's eligibility for elected office and who controls Punjab province.

The Supreme Court ruled on February 25 that Sharif and his politician brother, Shahbaz, were ineligible to hold elected office. The ruling nullified a by-election victory by Shahbaz Sharif and disqualified him from being chief minister of Punjab.

The Sharif party's government was thrown out of power in the province and Zardari imposed central rule there for two months.

The Sharifs said Zardari was behind the ruling, which they said was based on old convictions they say were politically motivated, and they threw their wholehearted support behind a protest campaign by lawyers seeking Chaudhry's restoration.

In a step toward dispelling mistrust, the government asked the Supreme Court on Saturday to suspend the ruling while an appeal against it is heard.

The government also says it wants to lift central rule, known as governor's rule, in Punjab as soon as possible. The Sharifs' party is expected again to lead a coalition government there.

Pakistan's main stock market index got a boost last Monday when the political crisis was defused and investors were subsequently encouraged by hope for lower interest rates, dealers said.

Financial markets were closed on Monday for the Pakistan Day holiday.

(Editing by Robert Birsel and Paul Tait)

Pakistan