Stocks end lower; rupee weakens

KARACHI: Pakistani stocks ended lower on Tuesday on fears of growing violence in the country's financial hub Karachi, following the Muttahida Qaumi Movement's (MQM) decision to quit the ruling coalition, dealers said.

Senior party official Farooq Sattar said on Monday the MQM could no longer work with the "dictatorial" government.

Although the move was a blow to the government, it was not expected to collapse as it enjoys a comfortable majority in parliament.

"Political rifts between coalition partners resulted in more than a 100 points decline while institutional activities also remained dull ahead of the fiscal year ending June 30," said Samar Iqbal, a dealer at Topline Securities Ltd.

The Karachi Stock Exchange's benchmark 100-share index ended 0.82 percent, or 102.05 points, lower at 12,362.44.

Turnover rose to 67 million shares, compared with 52.79 million shares traded on Monday but still lower than the daily turnover which is usually on average around 100 million shares.

In the currency market, the rupee weakened to 86.03/08 to the dollar, from Monday's close of 85.97/86.03, due to increased dollar demand for import payments and year end payments.

The rupee hit a record low of 86.50 last month, but dealers said the local unit is expected to stay largely stable in the coming days because of increased remittances from Pakistanis working abroad.

According to official data, remittances crossed $10 billion for the first time, hitting $10.1 billion in the first 11 months of the 2010/11 fiscal year, an increase of 25.20 percent compared with the same period last year.

In the money market, overnight rates were flat at 11 percent, unchanged from the previous day's close amid increased liquidity in the interbank market.

Copyright Reuters, 2011