A Pakistani court has refused to rule on whether to lift a ban on Nawaz Sharif, an opposition leader and former prime minister, holding elected office.

Pakistan's Supreme Court also nullified on Wednesday the election of Sharif's brother, Shahbaz, as chief minister of Punjab province in 2008.

The court refused to rule on a challenge to the electoral ban on Nawaz Sharif - in effect continuing the bar on him standing for election.

The court's decision to nullify Shahbaz Sharif's election as chief minister of Pakistan's richest province has prompted fears of renewed confrontation between the country's main parties.

Political uncertainty

Pakistani stocks fell 4.2 per cent on Wednesday amid fears the country is heading towards another period of political instability. 

Shahbaz Sharif was banned from standing for election over allegations he was involved in the extra-judicial killing of five anti-government fighters in 1998.

A court later acquitted him of the charges, clearing the way for him to stand in the 2008 elections.

Nawaz Sharif was barred from participating in last year's election because he had been convicted for the 1999 hijacking of the then army chief General Pervez Musharraf's aircraft. 

The incident triggered a military coup led by Musharraf and Sharif, who served two terms as prime minister during the 1990s, was subsequently ousted from power.

He returned from exile last year to lead his Pakistan Muslim League (Nawaz) during the 2008 general election.

The election ban prevents Sharif from assuming a leadership position in parliament.