BUNER, Pakistan, April 29 (Reuters) - Pakistani troops dropped from helicopters onto hillsides behind Taliban fighters holding entrances to the Buner valley, according to witnesses, as the second day of an offensive began on Wednesday.

Pakistan's demonstration of military resolve will reassure U.S. President Barack Obama and Afghan counterpart Hamid Karzai, when they meet Pakistani President Asif Ali Zardari in Washington on May 6/7 to discuss regional strategy.

The Taliban's entry into a region just 100 km (60 miles) northwest of Islamabad earlier this month had sent shivers through Pakistan and sparked alarm in the United States.

The army, however, said a few hundred militants holed up in the mountains did not represent a real threat to the capital of the nuclear-armed Muslim nation, despite their proximity.

Residents could see and hear the fighting on the slopes overlooking Buner town on Wednesday, and several saw troops rappelling down ropes from helicopters in a drop behind enemy lines.

"We saw a helicopter dropping troops on the hills early this morning. It came about seven or eight times," said Arshad Imran standing in the town's central bazaar.

"We hear sound of explosions off and on and we can see helicopters flying over the mountains."

The military estimated some 500 militants were in Buner, and that it might take a week to clear them out. Jet fighters and helicopters gunships provided air support for army and paramilitary troops leading the offensive on Tuesday.

U.S. ENCOURAGEMENT

Pakistan is desperate for military and economic support to fight the insurgency.

But allies had feared Zardari's government was too ready to appease the militants after he signed off on a regulation to introduce Islamic sharia courts in the Malakand division in the North West Frontier Province.

Malakand has a long history of Islamist fervour going back to the British Raj in pre-Partition India, even though in earlier times the Swat valley had been a centre of Buddhism and until a couple of years ago had been a favourite destination for honeymooners, hikers and skiers.

While Buner is located south of Swat, the first military operation began southwest of Swat, in Lower Dir district on Sunday.

The government had hoped that meeting demands for sharia courts would quieten the militants in Swat.

But the Taliban instead became emboldened, fanning out of Swat into other parts of Malakand, including Buner, Lower Dir and Shangla districts.

A military spokesman said 10 soldiers and around 70 militants were killed in three days of fighting in Dir, though there were no independent casualty estimates.

The Pentagon urged Pakistan to remain on the offensive.

"The key is to sustain these operations at this tempo and to keep the militants on their heels and to, ultimately, defeat them," Pentagon press secretary Geoff Morrell said.

"The test of all of these Pakistani military operations -- because we've seen them from time to time in the past -- is always their sustainability," he told reporters in Washington.

Washington is considering rushing hundreds of millions of dollars in emergency aid to Pakistan, the U.S. Senate's second-ranking Republican, Jon Kyl of Arizona, told reporters.

There have been signs of a sea change within Pakistan's fractious polity, with even conservative religious parties recognising the need to push the Taliban back.

A police official in Buner, speaking on condition of anonymity, said militants briefly took dozens of policemen and Frontier Constabulary personnel hostage in the district's Pir Baba area but released them on condition they would stay out of the fight. There was no official confirmation of the incident. (Additional reporting by Junaid Khan and Augustine Anthony in Pakistan; Writing by Simon Cameron-Moore; Editing by Bill Tarrant)

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