Pakistani stocks end lower; rupee weakens

KARACHI, Oct 22 - Pakistani stocks ended one percent down on Thursday but off day lows as investors sold shares amid worsening national security, dealers said.

"Investors are very jittery at this point due to the law and order situation," said Sajid Bhanji, a dealer at brokers' Arif Habib Ltd.

Suspected Taliban militants shot and killed a Pakistani army brigadier and his driver in the capital on Thursday as the military continued an offensive against insurgent strongholds near the Afghan border.

Later there were reports of a bomb and gunfire at a court in Islamabad, but police said they were a false alarm.

The Karachi Stock Exchange's benchmark 100-share index fell 1.01 percent, or 93.78 points, to 9,154.00 on turnover of 161.25 million shares.

The has gained 56.07 percent this year after losing 58.3 percent last year.

"Before the close of today's session, the market recovered sharply amid support from local institutions," said Furqan Punjani, an analyst at Topline Securities.

Dealers said the fundamentals of the market were strong and investors are expecting strong corporate earnings to be announced in coming days, but confidence had dampened due to the worsening security situation.

Pakistan State Oil and MCB Bank are due to announce their results tomorrow for the quarter ended Sept. 30.

Dealers said investors were also worried that worsening security was forcing selling by foreign investors, who have been active buyers in the market in recent weeks.

In the currency market, the rupee ended the day at 83.28/29 to the dollar, compared with Wednesday's close of 83.23/34. Dealers said a worsening security situation can have a negative impact on the currency.

The rupee has been supported by remittances from Pakistanis working overseas, but dealers expect pressure from importers will weaken the currency. (Reporting by Sahar Ahmed; Editing by David Fox)