Karachi - Pakistan stocks suffered the biggest setback of the year Tuesday, plunging by 4 per cent amid mounting political uncertainty deepened by the break-up of the ruling coalition, traders said.

Traders said the collapse of the alliance in the parliament and conflicting statements from other small, but key partners of the coalition raised concerns about the fragile democratic system.

"There is an air of uncertainty hanging over the presidential elections," said Ahsan Mehnti, chief executive at Shahzad Chamdia Securities.

The presidential election is scheduled for September 6 and so far six candidates are in the race, including Asif Ali Zardari, widower of slain Benazir Bhutto, a highly controversial figure who is also accused of swindling millions of dollars in kickbacks and money-laundering.

Traders said foreign portfolio investors were completely out of the market while local investors also dumped blue-chip stocks.

Twice-elected premier Nawaz Sharif, the second-largest coalition partner, split from the four-month-old alliance Monday, blaming the ruling Pakistan People's Party of balking at reinstating the senior judges fired by former president Pervez Musharraf last year. (dpa)