In Karachi, Pakistan's economic centre, share prices crashed as soon as the stock market opened.

By the beginning of the second trading session the main 100-share index had lost 12%. It closed the first session at 944.3 after dipping to an all-time low of 939.11.

Karachi, Pakistan's economic centre

The fall-out from the nuclear tests wiped more than $850m off the market's value. It was the first day the stock market was open since Pakistan exploded its first nuclear bomb last Thursday.

"That is a very expensive bomb," said Munir Ladha, analyst with ML Securities, who predicted that Karachi's stock index could fall to around 800 points or less.

Dealers in Karachi said the plunge in share prices was inevitable as foreign investors rushed to sell shares of companies likely to be badly hit by sanctions.

Hina Akhlaq, a dealer for the Dutch brokers ABN Amro Securities, said fund managers had told her that they wanted to liquidate their holdings, but "may come back when the conditions allow."

Pakistan is expected to suffer more under international sanctions than India, because its economy is weaker.