ISLAMABAD, PAKISTAN?Pakistan?s President Pervez Musharraf, who rose to power in a coup nine years ago and became a key US ally in its campaign against terrorism, resigned to avoid the first impeachment in the nuclear-armed nation?s history.

The stony-faced former general announced the move in a lengthy address on national television, saying the charges against him would never stand but that he wanted to spare the nation from a damaging impeachment battle.

?I hope the nation and the people will forgive my mistakes,? Musharraf said in his address, much of which was devoted to defending his record and refuting criticisms. He said he was satisfied that all he had done ?was for the people and for the country.?
Celebrations broke out across the country after Musharraf?s announcement, with people dancing and handing out sweets.

Pakistani stocks jumped 4 percent on the news and the rupee, which had lost a quarter of its value this year, began strengthening.

It was not immediately clear whether Musharraf would stay in Pakistan.

Musharraf said he would turn in his resignation letter to the National Assembly Speaker on Monday, but it was not immediately clear whether it would be effective the same day.

Musharraf?s future

Foreign Minister Shah Mahmood Qureshi said leaders of the ruling coalition would discuss later on Monday whether to prosecute Musharraf in court on the impeachment charges.

?It is a victory of democratic forces,? Information Minister Sherry Rehman said. ?Today the shadow of dictatorship, that has prevailed for long over this country, that chapter has been closed.?

Musharraf dominated Pakistan for years after seizing power in a 1999 military coup, making the country a key strategic ally of the US by supporting the war on terror. But his popularity at home sank over the years.

Many Pakistanis blame the rising militant violence in their country on Musharraf?s alliance with the United States.

His reputation suffered blows in 2007 when he ousted dozens of judges and imposed emergency rule. His rivals won the February parliamentary elections and have since sought his ouster, announcing impeachment plans earlier this month.

Musharraf had resisted the mounting calls to quit, even after the coalition finalized impeachment charges against him.

The charges were expected to include violating the constitution and gross misconduct, likely in connection with the ouster of the judges and the declaration of emergency rule.

Legal immunity

In announcing he would quit after all, Musharraf mentioned the many problems facing Pakistan, including its sinking economy. He said his opponents were wrong to blame him for the mounting difficulties.

Allies and rivals said talks had been under way to get Musharraf to step down by possibly granting him legal immunity from future prosecution.

The second biggest party in the government has said Musharraf should be tried for treason, which carries a maximum punishment of death.

Qureshi would not say whether Musharraf might be granted a ?safe exit??speculation has focused on whether he might go into exile in Saudi Arabia or Turkey?or dragged through the courts.

US Secretary of State Condoleezza Rice on Sunday said the Pakistani president?s future was an internal issue.

While Musharraf was a ?good ally? who ?kept his word? on ending military rule when he stepped down as army chief last year, whether he should resign ?is a matter for Pakistan to determine,? she said.

Prolonged jockeying and uncertainty over Musharraf?s position had hurt financial markets in the country of 165 million people, and raised concerns in Washington and elsewhere that it was distracting from efforts to tackle militancy.

Musharraf was also backed into a corner by the resurgence of Islamic militants, who launched a massive wave of attacks last year that left more than 1,000 dead.

He survived three assassination attempts while holding what some have called the most dangerous job in the world.

Next president

His resignation climaxed nearly two weeks of political machinations in Islamabad after the fractious coalition finally agreed that Musharraf had to go.

The powerful Army, which has ruled for more than half the country?s 61-year history, has publicly kept out of the controversy over its old boss.

It was not clear who the next president would be. According to the Constitution, the chair of the Senate will become acting president until a new president is elected within 30 days for a five-year term.

Traditionally in Pakistan, the president has been a figurehead with the prime minister holding most powers. Under Musharraf, however, the president was much more powerful.

?It?s a victory for all democratic forces and it?s victory for Benazir Bhutto and all those who sacrificed their lives for democracy,? said Bhutto party spokesperson Farzana Raja.