Stocks losses as trade remain light

KARACHI: The Karachi Stock Exchange extended losses on Tuesday in another day of lacklustre trade, as investor sentiment reeled from last week's violence in Karachi and growing strains in the US-Pakistan relationship.

The Karachi Stock Exchange's benchmark 100-share index ended 0.81 percent, or 100.12 points, lower at 12,191.78. Turnover was only 32.21 million shares, compared with 31.59 million shares a day earlier.

Volume fell to a 10-month low of 29.53 million shares on Friday.

Dealers said concerns over the deteriorating relations between Pakistan and the United States were adding to the already weak sentiment.

Washington announced an $800 million delay in military assistance amid worsening US-Pakistan ties, and could exacerbate tensions between the two uneasy allies in the war against militancy.

In the currency market, the rupee strengthened to close at 85.84-88 to the dollar, up from 85.93-96 a day earlier, as steady dollar inflows outmatched the demand from importers.

"Dollar inflows were pretty steady today, and there were no big import payments as well, and that is why the rupee gained," said a dealer at a foreign bank.

The rupee hit a record low of 86.50 in May, and dealers said the local unit is expected to stay largely stable in the medium term because of increased remittances from Pakistanis working abroad.

According to official data, remittances topped $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 unchanged at the top level of 13.90 percent as liquidity situation continued to remain tight, dealers said.

COPYRIGHT REUTERS, 2011