PESHAWAR, Pakistan - Insurgents torched 160 vehicles, including dozens of Humvees destined for U.S. and allied forces in Afghanistan on Sunday, in the boldest attacks so far on the critical military supply line through Pakistan.
  
The American military said raids on two transport terminals near the beleaguered Pakistani city of Peshawar would have "minimal" impact on anti-Taliban operations set to expand with the arrival of thousands more troops next year.

However, the attacks fed concern that insurgents are trying to choke off the western supply route through the famed Khyber Pass and drive up the cost of the war. Up to 70 per cent of the supplies destined for western forces in landlocked Afghanistan go through the pass.

Sunday's attacks also dents faith in the ability of Pakistani authorities to contain the militants. Islamabad is already under pressure from India and the U.S. to act on suspicion that the deadly terror attacks in Mumbai were orchestrated by Islamic extremists based in Pakistan.

The owner of one of the terminals hit Sunday denied government claims that security was boosted after an ambush last month in which bearded militants made off with a Humvee and later paraded it in triumph before journalists.

"We don't feel safe here at all," Kifayatullah Khan told The Associated Press. He predicted that most of his night watchmen would quit their jobs out of fear.

"It is almost impossible for us to continue with this business," he said.

The attack reduced a section of the walled Portward Logistic Terminal to a smouldering junkyard.

Khan said armed men flattened the gate before dawn with a rocket-propelled grenade, fatally shot a guard and set fire to 106 vehicles, including about 70 Humvees.

Humvees are thought to cost about $100,000 each, though the price varies widely depending on armour and other equipment, meaning Sunday's losses may exceed $10 million.

An Associated Press reporter who visited the depot saw six rows of destroyed Humvees and military trucks packed close together, some on flatbed trailers, all of them gutted and twisted by the flames.

Khan said shipping documents showed they were destined for U.S. forces and the western-trained Afghan National Army.

The attackers fled after a brief exchange of fire with police, who arrived about 40 minutes later, he said.

The nine other guards who were on duty  stood helplessly aside. Khan said the guards put the number of attackers at 300, though police official Kashif Alam said there were only 30.

At the nearby Faisal depot, manager Shah Iran said 60 vehicles destined for Afghanistan as well as three Pakistani trucks were burned in a similar assault.

The attacks were the latest in a string highlighting the vulnerability of the supply route to the spreading power of the Taliban in the border region, which is also considered a likely hiding place for al-Qaida leader Osama bin Laden.

Vast quantities of supplies pass through Pakistan after being unloaded from ships at the Arabian sea port of Karachi. Some is routed through Quetta toward the Afghan city of Kandahar, but most flows through the Khyber Pass toward Kabul and the huge U.S. air base at Bagram.

The U.S. military in Afghanistan said in a statement that an unspecified number of its containers were destroyed in Sunday's attack but that their loss would have "minimal effect on our operations."

"It's militarily insignificant," U.S. spokeswoman Lt.-Col. Rumi Nielsen-Green said. "You can't imagine the volume of supplies that come through there and elsewhere and other ways."

Still, NATO has been seeking an alternative route through Central Asia, which it acknowledges is more expensive.

Pakistan halted traffic through the Khyber Pass for several days in November while it arranged for troops to guard the slow-moving convoys.

Shahedullah Baig, a spokesman for the Interior Ministry in Islamabad, insisted Sunday that the extra security covered the terminals.

"They are fully protected, but in this kind of situation such incidents happen," Baig said.

However, Khan, the depot manager, said that was untrue, and that there were only a handful of lightly armed police at the targeted terminals Sunday afternoon.

Peshawar has seen a surge in violence in recent weeks, including the slaying of an American working on a U.S.-funded aid project. On Saturday, a car bomb detonated in a busy market area of the city, killing 29 people and injuring 100 more.

Mehmood Shah, a former chief of security in Pakistan's tribal badlands now working as a consultant, said militants appeared to have moved into the Khyber region from both sides of the border in recent months to put pressure on the supply route.