A traders' organisation in Pakistan has offered a reward of Rs 10 million for anyone who beheads controversial India-born author Salman Rushdie following Britain's decision to confer knighthood on the writer, whose work has infuriated the Muslim world.

"We will give 10 million rupees ($165,000) to anyone who beheads Rushdie," Islamabad Traders Association General Secretary Ajmal Baloch said in Islamabad.

His announcement came during a protest by traders at one of the main markets.

Baloch also appealed to Islamic countries to boycott British products to protest the honour to Rushdie, whose Satanic Verses was considered blasphemous by Muslims.

The Chief Minister of Sindh province Arbab Rahim, meanwhile, said he was returning titles awarded to his ancestors by the British in protest over the Queen's decision.

The reaction of Pakistanis to the British decision is becoming more vocal by the day, with an Islamic scholars' body honouring Osama bin Laden on Thursday to protest the knighthood.

The country's leading religious and opposition parties and lawyers have planned demonstrations and protest rallies all over the country against Rushdie and the British government and the Queen.

Karachi police chief Azhar Farooqi said extra security measures are in place to avoid any untoward incident during these protests.

The News daily carried a report from London [Images], saying that Pakistanis living in the UK were fearful of racist attacks in reprisal.