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By Asim Tanveer

MULTAN, Pakistan (Reuters) - Police said they arrested the leader of a banned militant group on Friday in connection with sectarian attacks in the northwestern city of Quetta that have killed nearly 200 people this year.

Two bombings about month apart targeting the minority Shi'ite community in Quetta, claimed by the Sunni militant group Lashkar-e-Jhangvi (LeJ), sparked demonstrations across the country and the dismissal of the local government.

Police said they arrested LeJ leader, Malik Ishaq, in the town of Rahim Yar Khan at his home on Friday afternoon.

"LeJ has accepted responsibility for the recent Quetta blast and Ishaq is its supreme commander. That's why we have arrested him and 24 other LeJ militants," said Zafar Chatta, the district police officer.

The LeJ claimed responsibility for a blast that killed 85 people on Saturday in the provincial capital of Quetta. It also claimed responsibility for blasts on January 9 that killed 96 in the same city.

It was unclear why authorities did not arrest Ishaq, who was living openly at his home protected by gunmen, after the LeJ claimed the first bombing.

Pakistani leaders have done little to contain hardline Sunni Muslim groups which have stepped up a campaign of bombings and assassinations of Shi'ites in a bid to destabilize the nuclear-armed country and install a Sunni theocracy.

The LeJ, whose roots are in the heartland Punjab province, wants to expel the Shi'ites, who make up about a fifth of the 180 million population. Human Rights Watch says more than 400 Shi'ites were killed in sectarian attacks last year.

Chatta said Ishaq was being held under public order legislation and would be held at least a month while investigators interrogated him.

Ishaq was released from prison in July 2011 after spending 14 years behind bars charged with 34 counts of culpable homicide and terrorism.

He was released after the charges could not be proved - partly because of witness intimidation, officials said. Supporters showered him with rose petals when he left jail.

In an interview with Reuters last year, Ishaq said Shi'ites were the "greatest infidels on earth".

At that time he said he was a leader of Sipah-e-Sahaba, the LeJ parent group. He told Reuters that Shi'ites had insulted the Prophet Muhammad.

"Whoever insults the companions of the Holy Prophet should be given a death sentence," he said.

Many Pakistanis remain suspicious about the extent to which the LeJ has preserved its links with the country's powerful security services.

Journalists have asked how a truck with nearly a ton of explosives could have passed so many checkpoints in the heavily militarized garrison town of Quetta. The Supreme Court has ordered security services to explain why they were unable to stop the bombings.

(Additional reporting by Mehreen Zahra-Malik; Writing by Katharine Houreld; Editing by Jeremy Laurence)

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