The Karachi Stock Market (KSE) fell sharply on Tuesday, with investors fearing a worsening of relations between Pakistan and the United States, dealers said.
The KSE's benchmark 100-share index dropped 171.9 points, or 1.26 percent, to close at 13,429.56 points on volume of 54.6 million shares, compared to Monday's close of 13,601.46 points.
'Share prices fell ... after news that the U.S. has broken off talks with Pakistan on NATO supply routes,' said Samar Iqbal, a dealer at Topline Securities.
'Investors believe that worsening Pakistan-U.S. relations may affect the investment climate.'
The United States said on Monday it was withdrawing its team of negotiators from Pakistan without securing a long-sought deal on supply routes for the war in Afghanistan, publicly exposing a diplomatic stalemate and deeply strained relations that appear at risk of deteriorating further.
Pakistan banned trucks from carrying supplies to the war effort in neighboring Afghanistan last year to protest a cross-border NATO air attack that killed 24 Pakistani soldiers.
The Pakistani rupee closed at a record low of 94.43/48 to the dollar, compared to Monday's close of 94.29/36.
The rupee has been under sustained pressure in recent weeks because of increased import payments, especially for oil.
Overnight rates in the money market closed at 11.90 percent, the same level as Monday.
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