UPDATE 4-Pakistani stocks reverse losses; energy sector leads

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KARACHI Aug 5 (Reuters) - Pakistani stocks ended nearly 2 percent higher on Tuesday, recovering from early lows as energy stocks were in the limelight after an increase in well head gas prices by as much as 35 percent for some fields, dealers said.

Sentiment also was helped by acting finance minister Naveed Qamar's assurance that a market support fund would be active, dealers said.

Last month, Qamar announced the launch of a 20 billion rupee equity market stabilisation fund.

Officials from the Securities and Exchange Commission of Pakistan met with Qamar on Tuesday, a spokesman for the regulator told Reuters.

Trading on the KSE got off to a late start due to an emergency board meeting o discuss market conditions amid a precipitous slide in share prices.

After being more than 2 percent down at one stage, the KSE benchmark 100-share index .KSE rallied to end 1.92 percent, or 189.29 points, higher at 10,042.47, also recovering from a near 23-month low on Monday, on turnover of 117.1 million shares.

"There was a fresh air of optimism following the upwards revision of well head gas prices," said Sajid Bhanji, a dealer at brokers Arif Habib Ltd.

According to Oil and Gas Regulatory Authority, well head gas prices in Sui field were increased by 35 percent to 144.93 rupees per million british thermal units.

Pakistan Petroleum Ltd (PPL) wholly owns Sui gas field and is the primary beneficiary of this revision.

PPL (PPL.KA) rose 5.0 percent to 204.23 rupees.

The energy sector is the heaviest weighted sector, having a weightage of 24.62 percent.

Among the most active companies, volume leader NIB Bank (NDIF.KA) rose 4.91 percent to 9.4 rupees, National Bank of Pakistan (NBPK.KA) gained 1.68 percent to 109.90 rupees, and Oil and Gas Development Co Ltd was 4.34 percent higher at 109.45 rupees.

Some dealers said it was difficult to say how long the rally would last given the political and economic challenges that Pamistan faced.

Former prime minister Nawaz Sharif and head of Pakistan's People's Party Asif Ali Zardari were due to meet later on Tuesday for talks that could put the fractured four-month-old civilian coalition back together again or lead to a final split.

Sharif, the prime minister President Pervez Musharraf ousted when he took over as a general in a 1999 coup, wants judges dismissed by his usurper to be reinstated and wheels set in motion for Musharraf's impeachment.

Zardari has so far avoided confrontation with Musharraf, who neither the army or the United States want to see humiliated.

Investors were also worried by a slight chill between Pakistan and the United States, a major ally and source of funding.

Last week a New York Times report said U.S. intelligence agencies had evidence that members of Pakistan's spy agency helped plan a suicide car bomb attack on the Indian Embassy in Kabul on July 7.

Pakistan rejected these allegations and has offered to investigate, but India said recent events had brought their peace process to its lowest ebb since it was launched in 2004.

Investors also harboured doubts whether the four-month-old civilian coalition government has the ability to handle widening trade and fiscal deficits and inflation at a three-decade high. (Reporting by Sahar Ahmed; editing by Simon Cameron-Moore)