LAHORE, Pakistan (Reuters) - At least two bombs exploded at a Shi’ite procession in the Pakistani city of Lahore on Wednesday, killing up to eight people and wounding 100, piling pressure on a government already overwhelmed by floods.

Witnesses said a suicide bomber blew himself up in a crowd of hundreds, after a lull in violence during the floods, the type of attack that Pakistani Taliban militants have claimed in the past.

A Lahore local government official said up to eight people were killed in the explosions which came within 15 minutes of each other. There were reports of a third blast.

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

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.

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 militancy.

“The floods have inflicted damage to the economy which may, by some estimates, reach $43 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, and the sector is one of the biggest sources 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 criticized for its slow response to the catastrophe.

GRIM OUTLOOK

Many Pakistanis, who lost homes, families and livelihoods, are furious at the government for not doing enough to help them.

The powerful 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.

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British Deputy Prime Minister Nick Clegg said it could take Pakistan years to recover, 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 favor,” he said after visiting an aid camp.

Pakistan is expected to register economic growth of just 2.5 percent because of the impact of flooding, the information minister said, trimming an earlier 4.5 percent target.

The budget deficit is expected to climb to 6-7 percent of gross domestic product in the fiscal year 2010/2011, compared with an earlier forecast of 4.5 percent.

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Pakistan, a key U.S. regional ally, is also embroiled in a deadly battle with Islamist militants.

Before the floods struck a vast swath of the country, the army said it had scored major gains against the Taliban.

In two days of air raids starting on Tuesday, Pakistani forces killed up to 62 militants, their family members and other civilians with no ties to the fighters, officials said. Such strikes have undermined public support for the army.

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.