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Kazakh President Nursultan Nazarbayev on Monday sacked his son-in-law as head of the sovereign wealth fund Samruk-Kazyna, after a strike at the fund's core oil and gas asset erupted into the Central Asian state's deadliest clashes in decades, Reuters reported.

Nazarbayev had said last week he would fire billionaire Timur Kulibayev, one of the nation's richest and most influential people, after the Dec. 16-17 riots in the west of the country killed at least 16 people and wounded more than 100.

The bloodshed, which occurred on Independence Day, dealt a serious blow to the image of stability that Nazarbayev has touted as his main achievement in the vast nation of 16.6 million, Central Asia's largest economy and oil producer.

Deputy Prime Minister Umirzak Shukeyev was appointed to run Samruk-Kazyna, which manages state assets worth around $80 billion, Prime Minister Karim Masimov said.

Nazarbayev, a 71-year-old former steelworker who has put market reforms in place and overseen massive foreign direct investment but brooks no dissent, is under international pressure to investigate the unprecedented violence.

The clashes in the Mangistau region were centred on the town of Zhanaozen, 150 km (95 miles) from the Caspian Sea.

People in overalls bearing oil company logos were among those on the main square when protesters and riot police clashed on Dec. 16. Police fired shots and buildings were torched, including the local oil company headquarters.

Thousands of workers had been on strike since May, demanding higher wages and protesting at what they saw as illegal sackings of their colleagues.

Firing Kulibayev, who is married to Nazarbayev's middle daughter Dinara, is a signal that the veteran leader is not ready to relinquish his grip on power, analysts say.

Investors were waiting to see whether Kulibayev would be sidelined as a potential candidate to succeed his father-in-law.

Challenge to stability
"A challenge has been thrown down to all of us," Nazarbayev said at a meeting with top government officials, his staff and senior members of his ruling Nur Otan political party on Monday.

"The goal was to sow hatred in our society -- social, ethnic, religious and so on," his press service quoted him as saying. "According to preliminary information, we know that criminal groups dividing cash were behind this.

"They had to hide their traces, and that's why arson was set up," he said. "We also know of traces coming from abroad. We know what kind of subversive work was conducted within the country," he said, giving no details.

Nazarbayev fired the heads of the state oil company and its London-listed production unit last week, accusing the management of KazMunaiGas of failing to obey his order to resolve a labour dispute that had been simmering for seven months.

"The main reason for what happened is that government officials, Samruk-Kazyna management and all those who should have been directly tackling these labour disputes showed their utter irresponsibility," Nazarbayev said.

All government and local officials will in future be forbidden to leave the country for holidays, he said.

He said this "mobilisation" was especially needed "to be closer to people and to keep fingers on the pulse" in the run-up to a snap parliamentary election on Jan. 15 which his Nur Otan party is widely expected to win by a landslide.

"The election must become a factor that consolidates society around our core values: stability, unity and harmony," he said.

Succession question
Foreign investors who have put more than $120 billion into the country say the question of who will succeed Nazarbayev, Kazakhstan's only leader in 20 years of independence, is the biggest factor in their assessment of the country's stability.

A shrewd businessman who rarely speaks in public, Kulibayev is ranked Kazakhstan's third-richest man by Forbes magazine, with a fortune of $1.3 billion. He has played down the idea of that he has political ambitions, saying he is more concerned with business.

He is also a board member at Russian gas export monopoly Gazprom.

The United States and the European Union have expressed concern about the violence in western Kazakhstan and urged authorities to conduct a transparent investigation. Kazakh officials said they had invited U.N. experts to join an investigation.

The authorities say police were forced to open fire after being attacked by "criminal elements" and "hooligans" who were threatening civilians. A 20-day curfew is in force in Zhanaozen until Jan. 5.

Masimov said on his Twitter page that his deputy Shukeyev, the new Samruk-Kazyna head, would also remain in charge of a special government commission set up to investigate events in Zhanaozen.