ISLAMABAD (Reuters) -- Asif Ali Zardari has been sworn in as president of Pakistan, vowing to work with neighbors, particularly Afghanistan, after a period of strained relations between the two U.S. allies over Taliban violence.
Zardari, the widower of assassinated former Prime Minister Benazir Bhutto, swept an election by legislators on September 6 for a replacement for former army chief Pervez Musharraf, who resigned last month under threat of impeachment.
Investors and Pakistan's allies, led by the United States, hope the election will bring some stability after months of political turmoil and rising militant violence.
Zardari's three children and President Hamid Karzai of Afghanistan attended the swearing-in at the Presidency in Islamabad.
Karzai later held a news conference with Zardari at which both leaders stressed their intention to work together to solve problems, including militant violence.
"We shall stand with our neighbors ... and look the problems in the eye and tell the world that we are bigger than the problems," Zardari said.
The United States and Afghanistan say al Qaeda and Taliban militants lurk in sanctuaries in northwest Pakistani border areas, from where they orchestrate war in Afghanistan and Pakistan and plot violence in the West.
But Pakistan has played down the importance of the sanctuaries, saying the Afghan war is an Afghan problem.
Karzai reiterated his call to go after militants in their sanctuaries, whether in Pakistan or Afghanistan, and for international forces to avoid civilian casualties after a spate of such incidents in which scores of Afghans have been killed.
"The war against terrorism will only be won if we have the people with us. In order to have the people with us we must avoid civilian casualties," Karzai said.
'Need To Tighten Belt'
Zardari is taking office as many Pakistanis are furious with the United States after a bloody incursion by U.S. ground troops into a remote village on the Afghan border last week and a string of missile strikes by CIA-operated drone aircraft.
Zardari told the news conference the government had protested to the United States, adding: "Casualties of war are taking place. We cannot deny that innocents are dying".
Investors are hoping Zardari's election win will end political uncertainty that has dragged stocks and the rupee sharply lower. But markets were flat on Tuesday.
The Karachi Stock Exchange benchmark share index ended marginally lower, with analysts saying investors wanted to see concrete action to bolster the economy.
The index rose for six consecutive years from 2002 and was one of the top performers in Asia during that period, but it has plunged 41 percent from a lifetime high in April.
The rupee closed at 76.45/55 to the dollar, unchanged from closing on September 8. It hit a record low of 77.45 on September 3 and has lost about 20 percent this year.
Zardari said the government would not seek an International Monetary Fund program but it would take IMF advice. "They will follow measures because we need to tighten our belt," he said.
Zardari also said he hoped his first foreign trip would be to China and he would go to the UN General Assembly session in New York.
Zardari's decision in August to begin impeachment proceedings against Musharraf led to the former army chief's resignation.
Zardari said parliament would decide on whether Musharraf should get an indemnity from any prosecution.