Kathmandu - Nepalese share prices fell sharply on fears of Maoists forming the next government following their sweeping victory in elections last Thursday, reports said.

The Nepal Stock Exchange (NEPSE) opened for trading for the first time in nine days on Tuesday after government holidays, and saw the index fall by 3.54 per cent.

Nepalese media said the drop was caused by confusion over the future government's economic policy as well as speculative selling on fears of a Maoist rise to power.

The plunge in the market suspended trading for several hours, but when it resumed for trading, the stock prices kept falling.

"It appears that NEPSE will continue to see the trend until the time the Maoists make public their economic policy," the Nepal Samacharpatra newspaper quoted an unnamed stock exchange official as saying.

"Small investors seem to have taken a wait and see approach in view of changed policy context," said Navaraj Pokharel, president of Nepal Stock Brokers Association.

NEPSE officials also said some traders were spreading rumours about possible change and its impact on the economy to bring down prices and take advantage of panic selling.

A total of 147 companies are listed on NEPSE which formally began trading in January 1994. (dpa)