The attack on Americans working for the US consulate in Karachi on 7 March has alarmed the business community and dented hopes of attracting overseas investment, analysts say.

Two consulate workers were killed and one seriously wounded. It was one of the most serious attacks yet on foreigners in Karachi, which is experiencing a rising tide of violence.

'The killings have created nervousness in business and trade circles and could affect foreign investment,' Sirajuddin Cassim, president of the Karachi Stock Exchange was quoted by Reuters as saying. 'It will further affect trade and commercial activities in Karachi where the worsening law and order situation has resulted in heavy losses to industries,' said Jamil Mehbob, acting President of the Federation of Pakistan Chamber of Commerce & Industries.

Karachi stocks fell by 1.5 per cent after the attack. 'These murders have had an adverse effect on a market which is already depressed by continuing violence in Karachi,' Hina Akhlaq, a dealer at the KASB Company said.

'We urge the government to apprehend the culprits and award exemplary punishment and bring the situation under tight control to avoid any impact on foreign investment in Pakistan,' said Nisar Memon, the local representative of IBM and president of the Overseas Investors Chamber of Commerce & Industry.

Prime Minister Benazir Bhutto was due to visit the US in April and hoped to attract more US investment for Pakistan. Memoranda of understanding with US firms worth $4,000 million were signed in the fourth quarter of 1994 during a visit by US Energy Secretary Hazel O'Leary (MEED 30:9:94). Similar deals, worth $2,500 million, were signed in December.

There were no immediate claims of responsibility for the attack. However, in February, the US State Department advised US citizens in Pakistan to heighten their security awareness.

The warning followed the arrest in Islamabad of Ramzi Ahmed Yousef for alleged involvement in the 1993 World Trade Centre bombing in New York (MEED 24:2:95). Nusrat Bhutto, mother of Prime Minister Benazir Bhutto, has linked the attack to this event.

The Prime Minister, currently visiting Singapore, said that special police teams were investigating the incident.