"The United States strongly condemns this cowardly act by murderous extremists who are trying to undermine Pakistan's democracy," said Bush, who looked tense and took no questions.

The assassination and concerns of further international instability were cited as one reason for a fall in U.S. stock prices and a rise in oil prices Thursday. In afternoon trade, the Dow Jones Industrial Average of blue chip stocks was down more than 140 points or more than 1 percent.

The U.N. Security Council also condemned the assassination.

Pakistan was just emerging from another crisis after Musharraf declared a state of emergency on Nov. 3, and used sweeping powers to round up thousands of his opponents and fire Supreme Court justices. He ended emergency rule Dec. 15 and subsequently relinquished his role as army chief, a key opposition demand. Bhutto had been an outspoken critic of Musharraf's imposition of emergency rule.

Educated at Harvard and Oxford universities, Bhutto served twice as Pakistan's prime minister between 1988 and 1996.

Her father was Zulfikar Ali Bhutto, scion of a wealthy landowning family in southern Pakistan and founder of the populist Pakistan People's Party. The elder Bhutto was president and then prime minister of Pakistan before his ouster in a 1977 military coup. Two years later, he was executed by the government of Gen. Zia-ul Haq after being convicted of engineering the murder of a political opponent.

Bhutto had returned to Pakistan from an eight-year exile on Oct. 18. On the same day, she narrowly escaped injury when her homecoming parade in Karachi was targeted in a suicide attack that killed more than 140 people.

Islamic militants linked to al-Qaida and the Taliban hated Bhutto for her close ties to the Americans and support for the war on terrorism. A local Taliban leader reportedly threatened to greet Bhutto's return to the country with suicide bombings.

Hundreds of riot police had manned security checkpoints around the rally venue Thursday, Bhutto's first public meeting in Rawalpindi since she came back to the country.

In recent weeks, suicide bombers have repeatedly targeted security forces in Rawalpindi.

In November, Bhutto had also planned a rally in the city, but Musharraf forced her to cancel it, citing security fears.