Karachi - Pakistan stocks sank on Monday after a state corporate watchdog at the weekend lifted artificial measures which were keeping the market afloat for the last month, traders said.

The benchmark KSE-100 Index sank by 4.5 per cent to close at 11,177, down by 518 points.

Heavy foreign selling was witnessed in all stocks as investors quickly pulled out money amid a crisis of confidence.

In early June, the Securities Exchange Commission of Pakistan (SECP) imposed measures to halt the Karachi bourse's continuous slide. The steps included limiting the decline in share prices to 1 per cent per session.

But on Saturday the government again reverted to a normal 5 per cent limit.

"Foreign investors were obviously reluctant to invest in such a regulated market," said Najam Ali, head of JS Investment.

Meanwhile, Monday was also the first day of the introduction of 50-billion-rupee (702-million-US-dollar) fund to stabilize the market, but dealers opined that it would do little to attract investment because of confidence in the Pakistani market.

They said foreign investment in the country's main stock exchange had already fallen by 90 per cent during the last six months. (dpa)