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Pakistani soldiers take their positions at the site of a drive-by shooting where gunmen fired and injured two people in Islamabad November 6, 2009. REUTERS/Faisal Mahmood

ISLAMABAD (Reuters) - Pakistani soldiers entered the Taliban headquarters in South Waziristan on Friday, the military said, as gunmen wounded an army brigadier and his driver in a drive-by shooting in the capital.

The army went on the offensive in South Waziristan, a lawless ethnic Pashtun region on the Afghan border, on October 17, aiming to root out Pakistani Taliban militants behind a wave of violence in urban areas.

The offensive is closely watched by the United States and other powers embroiled in neighboring Afghanistan, as South Waziristan's rugged landscape of barren mountains and hidden ravines has become a global center of Islamist militancy.

Soldiers have been advancing into the militant heartland from three directions and had entered the Taliban headquarters in the town of Makeen, the army said.

"Today security forces have entered Makeen. A large part of the town has been cleared," the army said, referring to Makeen as the "base headquarters of terrorists."

There was no independent verification of the report as journalists are not allowed into the area except on an occasional trip chaperoned by the military.

A senior military official in the region said troops had met little resistance.

"Our troops are now clearing mines and IEDs (improvised explosive devices) and moving forward," said the official, who declined to be identified.

Analysts say many militants appeared to have melted away, perhaps into neighboring North Wazirstan where allied militant factions are based, from where they could strike back.

The military said 21 militants had been killed in Makeen, where Pakistani Taliban chief Baitullah Mehsud was killed in an attack by a U.S. missile-firing drone aircraft in early August.

Mehsud's house had been razed, the military said.

DRIVE-BY ATTACK

Foreign al Qaeda fighters are believed to be hiding in South Waziristan along with thousands of Pakistani insurgents. As the army squeezes militants out of their strongholds they have retaliated with bomb attacks and shootings in urban areas.

In the latest such attack, gunmen opened fire on a vehicle in Islamabad, wounding a brigadier and his driver. Dawn television said the brigadier worked for a military intelligence agency.

A brigadier and his driver were killed in a similar shooting on October 22. Days later gunmen opened fire at a military vehicle but the occupants escaped unharmed.

The violence has unsettled trade on Pakistan's stock market and the main index was 1.32 percent lower at 8,991.82 at 5:12 a.m. EST.

"Ahead of the long weekend, investors are very cautious because of political uncertainty and security fears," said Mohammed Sohail, chief executive at Topline Securities. "Nobody wants to take any risks."

Monday is a public holiday in Pakistan.

Separately, police killed two militants in a clash after they refused to stop their vehicle at a checkpoint in the town of Mansehra, 90 km (56 miles) north of Islamabad.

Two policemen were wounded. Police recovered bomb-laden jackets normally used by suicide bombers, along with detonators and explosives, said senior police official Waqar Ahmed.

(Additional reporting by Hafiz Wazir, Javed Hussain and Abrar Tanoli; Writing by Robert Birsel; Editing by Bryson Hull)