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 LAHORE: Police on Friday rejected the self-defence claim of a US official who shot dead two men in broad daylight, accusing him of cold-blooded murder as a court extended his remand.

In a move likely to further inflame ties with Washington, which says the man has diplomatic immunity and should be released immediately, a judge in the eastern city of Lahore ordered Raymond Davis be held in prison for 14 days.

On January 27 he shot two Pakistani men and after his arrest told police he acted in self-defence because he feared they were trying to rob him.

The US consulate general in Lahore sent a vehicle to recover Davis, but it ran over and killed a third Pakistani man, before fleeing the scene.

US lawmakers have threatened to cut payments to Pakistan, the beneficiary of $7.5 billion dollars of aid and $2 billion in military aid, and Washington has warned that high-level dialogue is at risk unless Davis is freed.

ABC News claimed US National Security Adviser Tom Donilon had threatened to expel Pakistan's ambassador to Washington, shut US consulates and cancel a forthcoming visit by the Pakistani president if Davis is not released.

However the US embassy and the Pakistani ambassador, Husain Haqqani, denied the report. Haqqani told AFP: "At no stage has any threat been made to me by any US official at any level and our dialogue continues."

The weak and unpopular Pakistani government is under enormous pressure at home to see Davis go on trial, in a country awash with anti-American sentiment.

About 500 protestors on Friday demanded that Davis be hanged.

"It has been proved that Raymond Davis committed murder," Lahore city police chief Aslam Tareen told a news conference, although he gave no motive.

"It was cold-blooded murder. Eye witnesses have told police that he directly shot at them and he kept shooting even when one was running away. It was an intentional murder," Tareen said.

He said there were no fingerprints on the triggers of the pistols found on the bodies of the two men and that tests showed the bullets were still in the weapons' magazines, and not the chambers.

"His plea has been rejected by police investigators," Tareen said, speaking in English. "He gave no chance to them to survive. That is why we consider it was not self-defence. We have proof it was not self-defence."

Demonstrating outside the Lahore headquarters of Pakistan's main Islamic party, Jamaat-e-Islami (JI), protesters on Friday shouted "Hang Davis," "US terrorism in Pakistan unacceptable" and "Friends of America are traitors".

The US embassy said it was working with the Pakistani government to resolve the issue and expressed regret for the loss of life.

"Eye witness reports show the American diplomat acted in self-defence. There's no doubt he has diplomatic immunity," said spokeswoman Courtney Beale.

Police have confirmed Davis has a diplomatic passport, the status of which has been subject to fierce debate.

On January 28, the US embassy identified him as a "staff member of the US consulate general in Lahore", the next day as a "diplomat assigned to the US embassy in Islamabad".

Under international laws, embassy diplomats have full diplomatic immunity whereas consulate officials are liable for detention in case of grave crimes.

Punjab government prosecutor Abdul Samad told reporters after Friday's court appearance that Davis had been remanded for 14 days pending further investigations and that the next hearing would be on February 25.

Police said he was being sent to Lahore's high-security Kot Lakhpat jail and that the defence had demanded immunity on his behalf, saying he could not be put on trial, and requested court proceedings be held in camera.

Only after prosecutors complete their report can formal charges be brought and a trial begun.

On February 17, the Lahore high court is expected to reconvene after giving the foreign ministry 15 days to answer on whether he has diplomatic immunity.

Few in Pakistan believe the reported former US special forces soldier, who was driving around with a gun, is a conventional diplomat.

Media reports claim he is a private security contractor or undercover agent. The US government has refused to confirm his name or precise job, other than that he belonged to the embassy's "technical and administrative" staff.

Copyright AFP (Agence France-Presse), 2011

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