Pakistan Oilfields Limited shares, fourth in the volume leaders, ended 5 percent higher at 359.47 rupees, while the KSE benchmark 100-share index ended 0.85 percent, or 103.34 points, higher at 12,314.99.

Turnover rose to 100 million shares from 95.85 million on Monday.

"The rally was led by POL today, as the new discovery is likely to have a positive impact on its earnings," said Mohammed Sohail, chief executive of brokers Topline Securities.

Dealers said other energy sector companies also performed well during the day, helping the index close higher.

They expect the market to stay steady in the coming days, despite the negative sentiment that emerged after Friday's budget for the fiscal year 2011/12 (July-June), in which the government did not remove a capital gains tax on individual investments.

In the currency market, the rupee ended at 85.94/97 to the dollar, a shade lower than the previous day's close of 85.92/94.

The rupee hit a record low of 86.50 last month, and dealers said the local unit may face some pressure in the days ahead, amid increased demand for dollar for import payments and a bleak outlook.

The rupee has lost more than 1.5 percent of its value since then, almost the same as its total loss of 1.53 percent in 2010.

In the money market, overnight rates ended at 13.0-13.5 percent, slightly higher than Monday's close of 12.5-13.0 percent, dealers said.

Copyright Reuters, 2011