Hundreds of Pakistani Islamist activists took to the streets Friday, calling for holy war and torching a US flag to condemn a $10 million US bounty on the founder of a terror group.

The Defence Council of Pakistan, an alliance of right-wing, religious and extremist groups, has called for rallies to denounce the move against Hafiz Saeed, whose Lashkar-e-Taiba group was blamed for the 2008 Mumbai attacks.

In Muzaffarabad, the capital of Pakistan-administered Kashmir, around 500 activists shouted "Al-Jihad, Al-Jihad (holy war)" as they marched on the city and set fire to a US flag in a main square.

Speakers asked President Asif Ali Zardari to cancel a planned visit to India on Sunday and demanded an American apology for the bounty.

"Such steps are forcing Muslims towards guns," said Abdul Aziz Alvi, the local head of Jamaat-ud-Dawa, which is seen as a front for LeT, is headed by Saeed and blacklisted by the United Nations and United States.

"We condemn American announcement against Hafiz Saeed," cried a banner at the rally, attended by members of other banned and religious groups.

The reward for Saeed was announced by US Under Secretary of State Wendy Sherman in India on Monday.

Saeed, who lives openly in Pakistan, has mocked the charges, calling a press conference to say he is ready to face "any American court" to answer charges.