Pak-Iran pipeline: KSE-100 index plumbs 441 points fearing sanctions

Stocks slumped by almost 2.5% as market experienced a panic-like situation over the pipeline, impending US reaction.

KARACHI: Pakistan stocks slumped almost 2.5 percent on Monday on fears of possible US sanctions following the ground-breaking ceremony of a much-delayed $7.5 billion gas pipeline from Iran, traders said.

The Karachi Stock Exchange's benchmark KSE-100 index shed 441.62 points, or 2.46 percent, to close at 17,522.56 with 173.03 million shares traded.

"There was a panic-like situation in the market as investors fear United States may impose economic sanctions on Pakistan because of the gas pipeline," analyst Mohammad Sohail of Topline Securities told AFP.

"The market experienced turmoil all the day, it never recovered till it suspended trading."

A consortium is to start work today on the gas pipeline despite American warnings of possible sanctions.

Pakistani President Asif Ali Zardari held talks last month in Tehran with Iranian counterpart Mahmoud Ahmadinejad and supreme leader Ayatollah Ali Khamenei, who urged Islamabad to press ahead with the project.

Zardari's spokesperson said the world should realise the project was being commissioned "purely to meet economic needs of the country".

Pakistani analysts said a statement from the US State Department was expected later in the evening, which could determine the future course of the market.

"The market's future trends depend on what the US State Department says in its next statement about the gas pipeline," Sohail said.