The arrest of a leading Pakistani politician in London sent Pakistan's stock market plummeting and prompted shopkeepers in Karachi to begin closing and locking their stores and heading for home out of fears of rioting.
Karachi braced for possible violence following the arrest of Altaf Hussain who runs the Muttahida Qaumi Movement and is also suspected of having links to Karachi's criminal underworld. He was arrested today in London on charges of money laundering.
After his arrest, Karachi shopkeepers began closing up and the nation's stock market plunged 450 points, although it later rallied to the drop was limited to 284 points. Several public transport buses and private cars were set on fire. There were reports of gunshots fired into the air, and the streets of Karachi were largely deserted.
Faisal Sabzwari, a former minister and present member of parliament for MQM, told ABC News that the "news of Altaf Hussain's arrest is a matter of grave concern" for the party, and said the party has announced a series of protests around the country.
"We will agitate in an emotional, charged but a peaceful manner," Sabzwari said.
A spokesperson for British High commission declined to comment on the investigation for ABC News, but said the British mission in Karachi "has been temporarily closed to the public."
Although Hussain, 60, has lived in London since 1992, he remains in control of the potent MQM party and gives crowd stirring speeches by phone. His MQM party controls most of the port city of Karachi, which is a key component of the country's economy. The party is also a coalition partner in the provincial government in Sindh, of which Karachi is the capital.
His party has a tainted past marred by allegations of running torture cells and using violence against their opponents including police, government officials and journalists.
In 2010 another MQM politician, Imran Farooq, was stabbed to death in an attack in London, and that set off riots in Karachi.
A senior MQM official, Nadeem Nusrat, appealed for calm today. "We appeal to all the workers to control your emotions," he said.
The Associated Press contributed to this report