Aug. 11 (Bloomberg) -- Al-Qaeda members may carry out bomb attacks in New Delhi and Mumbai before India's Independence Day celebrations on Aug. 15, the U.S. Embassy said, a month after the South Asian nation experienced its worst act of terrorism.

U.S. citizens should maintain a `low profile'' in India because of the risk of attacks by foreign terrorists on airports, hotels, markets and government offices, the embassy said in an advisory from New Delhi today.

Indian authorities have been on high alert since a series of explosions on trains and railway stations in Mumbai, the nation's financial capital, on July 11 killed at least 182 people. The danger of an attack during India's 60th Independence Day celebration in New Delhi has intensified after the U.K. police yesterday foiled a terrorist plot in London with suspected al-Qaeda links.

``The threat on India is very real and all strategic institutions will have to be on extra vigil,'' said N. Bhaskara Rao, chairman of the Centre of Media Studies, a political policy group in New Delhi. ``Any further attack will push India's relations with Pakistan to a new low.''

British police stopped a plan to blow up airliners from London to the U.S, in an attack ``suggestive'' of al-Qaeda, U.S. Homeland Security Secretary Michael Chertoff said yesterday. Pakistan's government said it helped the investigation by U.K. police and arrested three British nationals in the Asian nation.

Increased Security

Indian authorities beef up security at government buildings and strategic installations before Independence Day, which marks the handover from British rule in 1947. The subcontinent was divided into India, Pakistan and what is now Bangladesh.

On Aug. 15, Prime Minister Manmohan Singh will deliver a state-of-the-union address to the nation from the ramparts of the 17th century Red Fort in Delhi. In recent years prime ministers have delivered the address from behind a bullet-proof glass enclosure.

Intelligence agencies and security forces in India are ready to foil any terrorist plot, Anand Sharma, India's junior foreign minister, said at a briefing in New Delhi. India today announced stricter rules for air passengers, restricting them from carrying some liquids and gels on board flights. Passengers won't be allowed to carry more than one piece of hand baggage.

``We have already taken all possible precautions,'' said P.S. Pasricha, director general police, who heads the Mumbai, Maharashtra and railway police forces in the western Indian state. ``We have been on high alert for the past month. We are not taking any chances whatsoever.''

Markets Recover

India's stock market rose while currency and bonds fell after the U.S. embassy warnings, as the risk of attacks is already factored into the markets, traders and investors said.

``There is no specific concern about the terror threat in the bond market as of now,'' said Suresh Soni, head of fixed- income trading at Deutsche Asset Management Pvt. in Mumbai. ``Such attacks happen quite frequently in various parts of the country and the market is prepared to take them in its stride.''

The yield on the benchmark 10-year bond rose 4 basis points, or 0.04 percentage point to 8.13 percent at 5:30 p.m. close in Mumbai, according to data compiled by Bloomberg. India's currency fell 0.2 percent to 46.50 against the dollar, according to broker Kanji Pitamber & Co. The Bombay Stock Exchange's Sensitive Index gained 0.4 percent to 11,192.46, after falling 0.7 percent.

Arrests, Explosives

Yesterday, two Lashkar-e-Taiba militants, including a Pakistani, were arrested in New Delhi with two kilograms of RDX and other ammunition, possibly to subvert Independence Day celebrations, Press Trust of India reported.

India accuses Pakistan of backing separatist groups fighting in Jammu and Kashmir, India's only Muslim majority state, and allowing them to cross the border. Pakistan denies this, saying it only lends moral support to a freedom struggle. The neighbors, after fighting three wars, improved ties since April 2003 by restoring diplomatic and transport links.

Lashkar-e-Taiba, banned in India, was formed in 1990 in Afghanistan and is one of the largest groups fighting India's presence in northern Kashmir state, according to the South Asia Intelligence Review. It's designated a terrorist organization by the U.S. State Department.

``The al-Qaeda always functions through organizations that have local roots and local affiliations,'' said Ajai Sahni, executive director of the Institute of Conflict Management, a New Delhi-based policy research group. ``The Lashkar-e-Taiba is one of them.''

No Plans

Pakistan's junior information minister Tariq Azeem said Pakistan remains committed to fighting global terrorism.

``President Pervez Musharraf has made it clear that nobody will be allowed to use Pakistani territory for terrorist activities in other countries,'' Azeem told Bloomberg News in Islamabad.

U.S. and Indian businesses said they typically increase security in the run-up to Independence Day, and hadn't been notified of any specific plans for a terrorist attack.

``We are going to put extra security guards in our various facilities around Independence Day,'' K.S. Narahari, a spokesman for Round Rock, Texas-based Dell Inc.'s operations in India, said in an interview today. The company hasn't received special instructions or notices to expand security from Indian or U.S. authorities at its call centers and research and development facilities, he said.

``Security measures have already been intensified at our oil installations, especially because the threat perception is already high,'' Hemant Kirolikar, spokesman for Bharat Petroleum Corp., the nation's third-biggest refinery, said by the telephone from Mumbai, where the company is based.

Three British nationals of Pakistani origin were arrested in the Asian nation in connection with the plot to blow up planes flying from the U.K. to the U.S, an official from the country, who spoke on condition of anonymity, said today.

The Bank of England today ordered financial institutions to freeze the accounts of 19 people arrested in connection with the plot. The names listed appeared to be male and of Asian origin, with ages ranging between 17 and 35.

To contact the reporter on this story: Cherian Thomas in New Delhi at cthomas1@bloomberg.net.

Last Updated: August 11, 2006 10:12 EDT