Sept. 6 (Bloomberg) -- Russia, on the first of two days of national mourning for the 335 killed in last week's Beslan school siege, buried the dead as the search continued for 260 people that are missing after the country's worst terrorist atrocity.

The funerals of 170 people were held in the North Ossetian town of Beslan, state-run Rossiya television reported. Yesterday, relatives buried the first 18 dead at a new cemetery founded for those killed in the siege. President Vladimir Putin, in an address to the nation on Saturday, promised to overhaul the country's corruption-ridden security forces to fight terrorism.

``The most powerful feeling in public opinion is focused on the state's inability to defend its citizens,'' Moscow-based investment bank United Financial Group said in a daily report. ``The political result may be the loss of Putin's aura of invulnerability.''

The country's newspapers criticized a lack of cooperation between different forces in the handling of the crisis in Beslan. The school raid was Russia's fourth terrorist attack related to Chechnya in the space of 10 days. Two passenger planes crashed Aug. 24 after explosions, killing 89 people, and 10 died after a suicide bomb attack Monday near a Moscow subway station.

More than 420 people, including 237 children, remain in hospitals, with 58 of them in a critical condition, state-run newswire Itar-Tass said last night. Russia hasn't published a revised death toll since.

The Moscow head offices of the Interior Ministry and the Federal Security Service declined to comment on the numbers of dead, missing and wounded, referring inquiries to the crisis headquarters in Beslan.

Oleg Teziyev, a spokesman at the headquarters' hotline, declined to reveal the latest number of the dead. Lev Dzugayev, a spokesman for the North Ossetian government, didn't answer telephone calls to his office.

Conflicting Accounts

Terrorists held 1,181 people hostage in the school, the republic's government said Friday.

On the first day of the siege, authorities said there were between 120 and 150 hostages and on the following day said there were 354 people held by terrorists. At the time, the crisis headquarters declined to comment on accounts from released hostages that more than 1,000 people were in the school.

State-run television reported during the siege that the terrorists didn't make any demands, while released hostages and North Ossetian President Alexander Dzasokhov said the terrorists called for the withdrawal of Russian troops from Chechnya and the independence of the republic.

Mourning

Russians held mourning ceremonies in St. Petersburg, Omsk and Sochi. Moscow city government plans to hold a meeting at the Vasilyevsky Spusk near the Kremlin's walls, a traditional Moscow venue for mass demonstrations, at 5 p.m. tomorrow. Itar-Tass reported.

Several radio stations also called on people to stop on the streets and for drivers to sound their horns at 9 a.m. on Sept. 9, the ninth day after the storming of the school. The ninth day after death is a special day in Orthodox Christian mourning traditions.

Troops launched their assault on Friday after bombs exploded in the school and terrorists fired on hostages escaping the school's gymnasium, said Valery Andreev, head of the North Ossetian division of the Federal Security Service.

To contact the reporter on this story: Vladimir Todres in Moscow at at vtodres@bloomberg.net

Last Updated: September 6, 2004 10:09 EDT