The lake emerged on January 4 as a result of a massive landslide that killed 20, left about 25,000 people stranded and blocked Hunza river in a remote Himalayan region about 750 kilometres (450 miles) north of Islamabad.

Water from the lake has submerged parts of Gulmit, a tourist resort on the main Karakoram Highway linking Pakistan with China, resident Rehan Shah said.

The highway has already been closed, badly affecting trade between the two countries.

"We have suffered a loss of more than 500 billion rupees (about 59.3 million dollars) since January," president of the Gilgit chamber of commerce, Javed Hussain, told AFP in Karimabad, the main town in the picturesque Hunza valley.

Trade convoys arriving in the border town of Sust are sent to Hussaini town from where they are loaded onto boats to cross the lake, Hussain said.

Then private loaders, carrying goods on their back put the cargo on jeeps for onward shipment to Gilgit, he said.

Pakistani soldiers were seen helping residents to board the boats and leave their villages, an AFP reporter in the areas said.

Around 36 villages may be submerged if the banks of the lake burst as the water level continues to rise, Iqbal Jan, a local government official said.

"We have set up nine relief camps in Gilgit and 11 in Hunza and advised people to move now," Jan said but admitted that most people preferred to go to friends or relatives.

Army engineers have already created a spillway and water was expected to start draining into it later this week.

Officials in jeeps fitted with an address system Monday called on people to leave their homes. Similar announcements have also been made from mosques in the area, an AFP reporter in Gulmit town said.

Reluctant people were seen hurriedly smashing wooden doors and windows of their shops and homes, an expensive item that can be used to help in a future rebuild.

Local official Asadullah Lodhi said around 18,000 people may be affected in case the lake bursts its banks.

Officials say 1,700 people have already fled their homes after floods swept through Ayeenabad and Shishkat villages in the district of Hunza, wiping out dozens of houses.

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