Karachi  - Pakistan's main Karachi Stock Exchange suffered declines on Thursday amid rumours that the government may levy new taxes to boost fledging revenues, analysts said.

The key KSE-100 Index lost 165 points or 1.1 per cent to close at 15,305 on selling pressures from nervous investors.

"Rumours that government may impose Capital Gains Tax (CGT) built up this selling pressure," said Farhan Mehmoud, analyst at JS Global.

The Karachi Stock Exchange has been pressing the government since 2003 not to impose new taxes, especially the CGT. But dizzying heights of Pakistan's stock market have forced economists to demand taxes on financial markets.

The KSE-100 Index soared by over 700 per cent since 2001 backed by heavy foreign inflows, mainly thanks to war on terror funding after the September 11, 2001 attacks in New York. Pakistan has received around 11 billion dollars from the United States since then.

Meanwhile, the trade volume on Thursday also suffered renewed pressure and was down by 14 per cent to 238 million shares a day after market was off by 75 points as investors dumped blue chips stocks particularly those of energy and banking sectors.

The recent spike in international crude oil prices hovering at 118 dollars a barrel has eroded Pakistan's foreign exchange reserves by over 3.5 billion dollar during the last five months and created pressure to boost revenues on all fronts. (dpa)