Foreign investment to Pakistan falls 39 percent

KARACHI, May 19 (Reuters) - Net foreign investment inflows to Pakistan fell 39.5 percent to $3.601 billion in the first 10 months of the fiscal year, from July to April, according to the State Bank of Pakistan.

Foreign private investment was $3.58 billion in the July to April period, down 32.2 percent from $5.28 billion in the corresponding period the previous year, the central bank said.

Out of the total foreign investment inflow, foreign direct investment was worth $3.48 billion, down 16.7 percent from the year-ago period.

Foreign portfolio investment, meanwhile, fell to $119.4 million, down 93.3 percent from $1.77 billion in the year-ago period.

There have been outflows from the stock market since President Pervez Musharraf imposed emergency rule on Nov. 3.

The emergency was lifted on Dec. 15, but foreign investors remained cautious after the assassination of former prime minister Benazir Bhutto on Dec. 27.

There is also concern about the country's economy, with inflation at a 30-year high, a weakening rupee and widening trade and fiscal deficits.

Ratings agency Standard and Poor's cut Pakistan's sovereign rating last week citing increasing pressure from growing budget and trade deficits and volatile politics. (Reporting by Sahar Ahmed; Editing by Robert Birsel)