Police and paramilitary forces were called into to calm the crowd but the protests continued and two protesters were reportedly injured.

In the eastern city of Lahore, about 100 small investors staged another protest, burning tyres and blocking the road to the local exchange demanding government action.

There was a similar protest outside the Islamabad exchange, where chants of "Go democracy, go" rang out.

18-month low

The index is at an 18-month low and has fallen about 36 per cent from an all-time high in April.

"In order to protect small investors, the chairman and all members of the SECP [Securities and Exchange Commission of Pakistan] should be arrested immediately," one small investor todl the Reuters news agency.

Many investors demanded that the goverrnment act to stabilise the economy.

Authorities have proposed a market stabilisation fund of 50 billion rupees ($694m), but banking sources say that they were struggling to gather the money

Analysts say that investors are wary because of rising tensions on the Afghan-Pakistani border following Kabul's accusations of Pakistani involvement in attacks in Afghanistan.

Divisions in the new coalition government over whether to work with Pervez Musharraf, the president, or seek to have him removed from office have also created concerns.

Pakistan's currency, the rupee, has weakened 16.9 per cent against the US dollar since the start of the year, and soaring food and fuel prices are stoking inflation.

But Pakistan's poor performance this year is not unique in a region grappling with rising prices and slowing global growth. Neighbouring India's shares are down some 38 per cent from earlier this year.