* Once-vibrant industry staggers from killing of 10 climbers
* Islamist militancy mars former climbers' paradise
By Frank Jack Daniel
ISLAMABAD, June 24 (Reuters) - Pakistan's once thriving mountaineering industry is reeling from the killing by militants of 10 foreign climbers, a massacre likely to drive away all but the hardiest adventurers from some of the world's tallest and most pristine peaks.
A tour company present during the attack said gunmen dressed as police ordered tourists out of tents at the 4,200-meter (13,860-foot) base camp of Nanga Parbat, the country's second highest peak, late on Saturday night, then shot them and a Pakistani guide.
The attack on the last peak over 8,000 meters (26,400 feet) in the western Himalayas has been claimed by both the Pakistani Taliban and a smaller radical Islamist group.
The foreign victims included two citizens from China, one from Lithuania, one from Nepal, two from Slovakia, three Ukrainians, and one person with joint U.S.-Chinese citizenship.
Manzoor Hussain, president of the Alpine Club of Pakistan, said at least 40 foreigners including citizens from Serbia, Italy, Ireland, Denmark and the United States, among several other nationalities, were evacuated from a higher camp.
A group of Romanians is believed to be scaling the mountain from another side. Some other groups booked for climbs this summer have already cancelled, one company said.
Hussain said the attack was a "fatal blow" for his efforts to attract more climbers to the Hindu Khush, Karakoram and western Himalayan ranges, home to many unexplored summits.
"We are still in shock, we've had to apologise to so many mountaineers across the world," said Hussain, who described the attack as appalling and said he was devastated.
Geographically, Pakistan is a climbers paradise. It rivals Nepal for the number of peaks over 7,000 meters and is home to the world's second tallest mountain, K2, and three more that are among the world's 14 summits higher than 8,000 meters.
In more peaceful times, northern Pakistan's unspoilt beauty would be a major tourist draw, bringing sorely needed dollars to a nation that suffers repeated balance of payments crises.
Mountaineers, many from China, Russia and Eastern Europe, are among the last foreigners who regularly visit Pakistan for leisure. Tourism has been devastated since 2007 by militant attacks and fighting between the Taliban and the army in once popular tribal valleys such as Swat in the northwest.
The number of expeditions had also dwindled, but before the attack some 50 groups were expected this year in the remote Gilgit-Baltistan region, a stop over on the historic Silk Road.
That has changed following Sunday's massacre, which sparked protests on Monday in Chilas, the closest town to the base camp, which depends on climbing for income in the summer.
"I haven't slept since yesterday, it's a very sad situation," said Ghulam Muhammed, whose company Blue Sky Treks and Tours guided five of the climbers killed at the base camp.
Blue Sky is based in the town of Skardu, which is heavily reliant on the income brought by outsiders.
"I am very worried, now business is finished, today two or three have cancelled, it is difficult now," said Muhammed, who was in the capital Islamabad to speak to embassies and family members of the victims. "In Gilgit-Baltistan, a lot of the economy is from tourism - the money goes to transporters, hotels, markets, porters guides and cooks."
In reality, the tourist industry last thrived in the 1970s, when the "hippy trail" brought Western travellers through the apricot and walnut orchards of the Swat Valley and Kashmir on their way to India and Nepal.
Years of war in Afghanistan helped end the overland route to Asia, and Pakistan's tourism never really recovered.
While the attack on foreign climbers was a first, it did not come entirely out of the blue. Gilgit-Baltistan's Shi'ite Muslim population has suffered a number of sectarian killings by radical Sunni groups over the past year, including one that claimed responsibility for killing the climbers.
"We have been warning the government," Hussain said. "Security was beefed up, and there were checks on the road, but we wanted security parties for the mountaineers as well."
The Pakistan Taliban later said it had carried out the attack, in retaliation for the death of its second in command in a U.S. drone strike in May. Since then, Pakistan's new government has been tested by a succession of major attacks on targets ranging from female students to a funeral procession.
Gilgit-Baltistan is part of the disputed region of Kashmir. It is connected to China by a highway crossing the Karakoram range, home to K2. The attack was acutely embarrassing for Pakistan, which nurtures a close friendship with China in a drawn-out struggle with India over territory.
In 1995, a group of foreign tourists was kidnapped in the part of Kashmir administered by India. One escaped, one was beheaded and four have never been found. (Editing by Mark Heinrich)