Investors ransacked stock exchanges in Karachi, Lahore and Islamabad yesterday, reacting to a share-price rout that has devastated the life savings of many Pakistanis.

Police and paramilitary officers were drafted in to protect the Karachi Stock Exchange after a mob stoned the building and smashed windows. In Lahore, investors burnt tyres and blockaded the local bourse.

The violence came after a 35 per cent fall in the Karachi index in the past three months on concerns over the stability of Pakistan's fragile coalition Government, soaring inflation, and the weakness of the rupee.

Fears over growing lawlessness in northern Pakistan and the threat of United States military attacks in tribal regions have also contributed to an exodus of foreign investors that has helped to wipe more than £15 billion from the value of Pakistan shares since April.

Protestors reacted angrily yesterday after the removal by the Securities and Exchange Commission of Pakistan on Monday of a 1 per cent daily limit on share price falls and a ban on short selling.

The measures had been imposed to stabilise the market. After they were lifted shares fell more than 11 per cent in three trading sessions, wiping out another £2.5 billion in value.

Pakistan's slide into a bear market marks a reversal of fortune for a country that had previously benefited from a seven-year rally that had lifted equity prices 14-fold.

It is hoped that a planned 50 billion rupee (£350 million) stabilisation fund will prop up the market.

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