Pakistan on Monday suspended expeditions on its second-highest peak and evacuated climbers after Islamist gunmen shot dead 10 foreign trekkers, braced for the collapse of its tiny tourist industry.

Attackers dressed in police uniforms stormed a base camp at the foot of Nanga Parbat late Saturday, shooting dead the climbers and a Pakistani guide at point-blank range, officials said.

The victims have been identified as an American with dual Chinese citizenship, three Ukrainians, two Slovakians, two others from China, a Lithuanian and a climber from Nepal.

Pakistan's umbrella Taliban movement claimed responsibility, saying it had set up a new faction, Junood ul-Hifsa, to kill foreigners to avenge US drone strikes on Taliban and Al-Qaeda operatives.

It was the worst attack on foreigners for a decade in Pakistan and an unprecedented attack on mountaineers drawn to the intrepid climbing of the north, which until Saturday's shootings was considered immune from militancy plaguing other areas.

It is a major blow to foreign trekking expeditions, which provide the last vestige of international tourism in a country where Islamist militants have killed thousand of people in recent years.

Naiknam Karim, general secretary of the Pakistan Association of Tour Operators, said the killings were a "disaster" for Gilgit-Baltistan, where tourism is the main source of income.

"It will destroy tourism in our area," he told AFP, saying that he had already received a slew of cancellations by email and telephone.

Before the 9/11 attacks, more than 20,000 foreign tourists, climbers and trekkers used to visit Gilgit-Baltistan each year, but the number has since fallen to around 5,000, he said.

The Al-Qaeda attacks on the United States were followed by in war in neighbouring Afghanistan, a series of backlash attacks in Pakistan and since 2007, Pakistan's own domestic Taliban insurgency.

An average non-trekking tourist spends $3,000 in the area of stunning natural beauty, but trekkers sink $8-10,000 into the local economy, staying for longer as well as hiring guides and porters, Karim said.

"We used to be able to convince foreign tourists that there was peace in Gilgit-Baltistan but this incident has ruined everything," he told AFP.

"It will also badly affect domestic tourism... The Pakistani government has to take steps to re-build the trust otherwise this last industry will be ruined," he added.

The Alpine Club of Pakistan said around 40 remaining climbers on Nanga Parbat have been airlifted to the city of Gilgit with the peak now unsafe for trekkers.

"We are really shocked, traumatised and full of anger. Pakistan is known among the mountaineering community. It was a brutal massacre. These people were killed for no reason," said club president Manzoor Hussain.

He said there would be no further expeditions on Nanga Parbat this summer and that requests for winter climbs would be subject to a security review.

"This season is over," Hussain said.

Although expeditions on other peaks higher than 8,000 metres, including K2 -- the world's second highest mountain -- had not been suspended as the army was in those areas, he said.

Sultan Khan, the manager of a group that organises expeditions for foreign mountaineers and whose boss Nazir Sabir climbed Everest in 2000, said the killings spelt death for businesses such as his.

"Tourist traffic had already slowed down after the 9/11 attacks. We were barely surviving. This incident will ruin our industry," Khan told AFP.

"Pakistan was earning a huge amount from mountaineering teams and the financial losses will run into millions of dollars if teams stop coming to Pakistan," warned Khan.

Hussain said the attack was well-planned, carried out by well-equipped and well-trained people familiar with the harsh terrain, with suspected local involvement.

"It took place at 4,200 metres. It has to be the work of well-trained people. It takes two to three days to reach (the camp). The body needs to acclimatise for climbing up. How they went undetected is a big question."

The bodies of the dead tourists were on Sunday flown to Islamabad from where they will be repatriated.

Police say a massive search operation is under way to track down the suspects.

"The military, police, law enforcement agencies are all involved. The terrain is tough. Four helicopters are also combing the suspected areas," police official Mohammed Naveed told AFP from the district of Diamer.

Karim said no one in the tourist industry was satisfied with the police operation, doubting that the culprits would be caught.