Pakistan stocks too surge 5 pc

The Karachi Stock Exchange 100-share index ended 54.59 points, or 5.03 per cent, higher at 1,139.65 points. "Local institutions and retail investors were active buyers and there was room for more improvement," said Aziz Anis, a dealer at W I Carr Securities.

But equities analysts said a lingering power row involving Hub Power Company was likely to keep the market below the 1,400-point level it had reached before the conflict over Kashmir erupted. "We could see arise of 100 to 150 points, but above that would depend on Hubco," said Alvi.

World Bank-backed Hubco, which has a 1,292-megawatt power station near Karachi, has been at the centre of a storm since the Pakistani government accused it a year ago of obtaining its contract corruptly under the previous government of Benazir Bhutto. Both Bhutto and Hubco deny the charge.

Hubco is one of the largest companies listed on the Karachi Stock Exchange, where it is seen as a market barometer. The key Karachi index has lost over 300 points since the confrontation over Kashmir began in May.

India has launched an air and ground offensive to evict hundreds of Moslem infiltrators from the mountains of Kashmir, in the most serious stand-off over Kashmir in nearly 30 years.

Foreign Minister Sartaj Aziz said guerrillas had begun pulling out from parts of Kashmir under an agreement reached between military officials of both countries on Sunday.

Analysts said the accord lifted the threat of war between India and Pakistanbut religious and opposition parties could cause problems for Prime Minister Nawaz Sharif without posing a major threat to his government.

"He has too large a mandate to be threatened. The army has also not moved against him, therefore he is safe on that end," said an equity analyst at a foreign brokerage house.

Sharif has a huge parliamentary majority and the opposition has lacked a leader since Pakistan People’s Party leader Benazir Bhutto was convicted of corruption this year and has stayed abroad fearing she will be arrested on her return.