"We still want to have talks with the Taliban and are monitoring the situation as it develops," Sharif told a group of businessmen and traders who called on him at the Governor House here.
The Tehrik-e-Taliban Pakistan vowed to launch a wave of revenge attacks and ruled out talks with the government after their former leader Hakimullah Mehsud was killed in a US drone strike on Friday.
Hardline commander Mullah Fazlullah, named the new chief of the Taliban, too is opposed to talks.
"We don't want further bloodshed and killing of our brothers and sisters. This matter should have been resolved earlier but now it is incumbent upon us to address this issue," he said.
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Fazlullah is seen by analysts as one of the most extremist Taliban commanders. Shortly after his appointment, Taliban spokesman Shahidullah Shahid described the Pakistan government as a puppet of the US and said their new chief was against talks.
The Prime Minister, who is on a visit to Karachi, met a delegation of Muttahida Qaumi Movement leaders who expressed concern at targeted operations being carried out in the city by paramilitary forces and police.
"We informed the premier about our concerns and also that we feel this operation is targeted against our party," a senior MQM leader said.
But shortly after meeting the MQM delegation, Sharif expressed satisfaction at progress in the operation and said action would be taken against criminal elements in Karachi without any discrimination.
During a meeting at the Pakistan Rangers' headquarters, Sharif was briefed about the operation against criminals and anti-social elements. He asked officials of the paramilitary force to continue the targeted operation and enhance its tempo to end lawlessness in Karachi.
Karachi, the largest city and economic hub of Pakistan, is riddled with targeted killings, gang wars, kidnappings for ransom, extortion and terrorism.