Stocks fall as political crisis erupts

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KARACHI: The Karachi Stock Exchange's benchmark 100-share index fell on Monday after the second-largest party in the governing coalition joined the opposition, depriving the government of a majority and raising the prospect of an early election.

The KSE was down 1.6 percent at 11,833.68 points, on turnover of 16.1 million shares, by 9:59 a.m.

"There is nervousness in the market and foreign investors are closely watching what direction the economy and politics will take now," said Khalid Iqbal Siddiqui, director at Invest & Finance Securities Ltd.

The Muttahida Qaumi Movement (MQM) said on Sunday its decision to go into opposition had been taken because of the government's fuel prices policy. It means the opposition now has the numbers in the National Assembly to force a no confidence vote against Prime Minister Yusuf Raza Gilani.

Losing such a vote could trigger an election.

Foreign investors bought shares worth a net $515 million in 2010 and were a major driver behind the 28 percent rise in the KSE-index last year.