Shops, businesses and schools shut across Karachi Friday, as the city braced for further unrest following the funeral of a politician the Taliban claimed to have killed.

Manzar Imam, 42, a lawmaker from the Muttahida Qaumi Movement (MQM), a coalition partner in the federal government and the dominant political party in Karachi, was shot with three of his guards in a drive-by shooting on Thursday.

Pakistan's umbrella Taliban faction claimed responsibility for his death and threatened further attacks on the party.

"This was a first gift to MQM and we assure the people of Karachi that we will soon free them from MQM's clutches," Tehreek-e-Taliban spokesman Ehsanullah Ehsan told AFP by telephone from an undisclosed location.

"MQM is a secular party and we will increase such attacks against them," he said.

Karachi last year saw its deadliest year in two decades, with around 2,000 people killed in violence linked to ethnic and political tensions, raising fears over elections due this year.

Overnight violence in Karachi left five people dead and around 30 wounded, according to police.

Police said "thousands of people" attended funeral prayers for Imam and his three guards. Their coffins, wrapped in the MQM's tricolour, were later taken for burial.

"All political and religious parties have to unite against the terrorists killing our lawmakers and politicians, otherwise terrorists will occupy the whole country," said MQM provincial information technology minister Raza Haroon.

Markets shut, streets were deserted and schools closed, with office attendance thin, although government departments, the port and stock exchange remained open.

Hyderabad, the second largest city after Karachi in southern province Sindh, was similarly shut down and people burnt tyres to protest against Imam's killing.

It is the second shooting of an MQM provincial lawmaker in just over two years in the city, Pakistan's business centre, wihch has a population of 18 million.

The death of MQM lawmaker Raza Haider in an ambush in August 2010 sparked a fierce wave of ethnic and politically linked violence that killed scores of people.