Pakistan stocks down almost 4 per cent on foreign selling

Karachi - Pakistan stocks plunged 3.89 per cent on Friday amid constant foreign selling attributed to US allegations that the country's military was supporting Islamic militancy in neighbouring Afghanistan, traders said.

The key KSE-100 Index of the Karachi Stock Exchange fell by over 412 points to close at 10,171 as the New York Times on Thursday cited a new CIA assessment saying Pakistani intelligence agents were involved in the July 7 bombing of the Indian embassy in Kabul that killed 54 people.

The conclusions were reached on the basis of communications intercepted between the attackers and Pakistani intelligence officers, the Times reported.

The fresh jolt for the market came a day after many foreign investors pulled out their portfolios in droves as the market lost around 2.5 per cent. On Friday local brokers again received frantic calls from their overseas clients to square off their positions, traders said.

"The reports about US concerns and mistrust of Pakistan's security institutions are serious in nature," said trader Siddiq Dallal, head of Siddiq Dallal Securities. "These are creating anxiety among the foreign investors."

Traders said Pakistan could hardly cope with its distressed economy if the US went as far as imposing sanctions or mustered NATO forces to attack militant strongholds in Pakistan's restive tribal region, a scenario still described as a remote possibility by local security analysts. (dpa)

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