Pakistan's stock market slides 5%

Police have used tear gas and batons to break up demonstrations

Pakistan's main stock market has fallen nearly 5% as investors reacted to the emergency rule imposed by President Pervez Musharraf on Saturday.

The fall was the biggest one-day decline on the Karachi Stock Exchange 100-share index for 16 months.

The benchmark KSE index ended the day down 4.6% at 13,279.60.

"I think any long term investment, and any sort of clean and productive money isn't going to come in now," said Asad Saeed, a Karachi-based economist.

The uncertainty also saw the rupee currency fall to its lowest value since 27 August.

Political landscape 'uncertain'

The KSE share index fell by 2.5% when trading got underway on Monday.

However, the index fell further on the back of a number of rumours. One of the rumours - denied by officials - said that President Musharraf had been put under house arrest by the vice-chief of the army.

President Musharraf declared the emergency on Saturday, saying he was acting to curb extremism.

Some analysts think the move could delay national elections due in January.

On Monday police used tear gas and batons to break up demonstrations by Pakistani lawyers against the state of emergency.

"Going back to democracy will take time now. The political landscape is now a lot more uncertain than before," said Dilip Shahani, Hong Kong-based HSBS credit analyst.

The main stock index has risen more than 1,000% since the end of 2001 and last month reached its peak of 14,908.91.