| Updated at: 2155 PST, Monday, February 28, 2011|
KARACHI: The prices of local stocks at Karachi Stock Exchange (KSE) witnessed slight recovery on Monday after falling to a near three-month low the previous trading session, although investors remained cautious about U.S-Pakistan relations, dealers said.
The Karachi Stock Exchange's benchmark 100-share index ended 0.59 percent, or 65.70 points, higher at 11,289.22,recovering from its lowest close since Dec. 1, on turnover of86.23 million shares.
"Investors accumulated shares in an oversold market, however investors are still cautious on concerns for Pakistan and US on the unresolved Raymond Davis case," a dealer at KSE said.
Davis, allegedly a CIA contractor, is being held in prison after shooting dead two Pakistanis in the city of Lahore last month in what he said was an attempted robbery.
The United States says Davis is protected by diplomatic immunity, while Pakistan says the courts must decide. The case has inflamed anti-American sentiment in Pakistan. Dealers said investors also feared foreign selling due tothe global sell-off in equity markets following the crisis in Libya.
The Karachi Stock Exchange has a small market capitalisation and the selling of only $2 million to $3 million amid a lack of buyers could spark a sell off or large percentage swing, analysts said. Dealers said there was also political uncertainty regarding a possible increase in localfuel prices expected to be announced later in the day.
Pakistan's government bowed to political pressure last month and reversed a decision to increase fuel prices, a move likely to further widen the country's budget deficit. It haskept the fuel prices unchanged since November 2010.