At least 17 Pakistani soldiers have been killed in an ambush by militants near the Afghan border, officials say.
Twelve militants also died in the clash about 25km (15 miles) from Miranshah in North Waziristan, the army said.
President Musharraf has again ruled out declaring an emergency. There have been a spate of attacks since soldiers stormed a radical mosque in Islamabad.
The mosque assault prompted militants along the border to scrap controversial peace accords with the government.
Meanwhile, Pakistan has dismissed a US intelligence report that says al-Qaeda has re-grouped and gained strength on Pakistan's north-western border with Afghanistan.
Foreign ministry spokeswoman Tasnim Aslam said the document contained what she called unsubstantiated assertions, and she called for concrete and actionable intelligence to back them up.
The report, published on Tuesday, argued that crumbling state control in the frontier region had offered al-Qaeda an increasingly comfortable hide-out from which to plot attacks, including on the United States.
A military spokesman said that in addition to the soldiers killed on Wednesday, another 14 had been injured in the ambush in the Lwara Mundi area of North Waziristan.
Pro-Taleban militants are said to have attacked the soldiers' convoy with rockets, then opened fire with automatic weapons.
Military officials said 12 militants were also killed in the gun battle, as well as five others in a separate clash in the area. There was no immediate independent confirmation of the claim.
Speaking to newspaper editors in Islamabad, President Musharraf again stressed that he would not announce a state of emergency in the face of the violence.
"Al-Qaeda has weakened because of the actions taken by Pakistani forces," the state-run APP news agency quoted him as saying.
"We are in direct confrontation with the extremist forces - moderates versus extremists."
Gen Musharraf also promised that elections due later this year would be held on time, APP said.
The latest violence followed a suicide bombing in North Waziristan on Tuesday that killed three soldiers and a civilian.
Three suicide blasts over the weekend left more than 70 dead near the border.
On Tuesday evening, a bomb killed at least 15 people at a lawyers' rally in the capital, Islamabad. It is not clear who was behind that attack.
Militants say they have torn up their peace agreement with the government because new check posts have been set up in the tribal area and compensation has not been paid to families of tribesmen killed in army operations.
Pakistani authorities have been trying to shore up the deal since it broke down on Saturday.
Correspondents say that without it, the army risks fresh violence in a region thought to contain many militants.
The government has sent thousands of new troops to the north-west fearing there could be a new "holy war" in revenge for the siege.
Many of the militants in the Red Mosque (Lal Masjid) complex in the capital were thought to have come from the north-west.
President Pervez Musharraf last week vowed to root out extremists "from every corner of the country".
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