Pakistani stocks opened strong again, hitting a life high in early trade, as investors celebrated the peaceful election, saying it was the first step towards stability.
THE CHOICES
Intense negotiations are expected over coming days, and Zardari and Sharif are due to meet on Thursday. If they do not agree, the PPP's door could re-open to Musharraf's supporters.
But Sharif joining forces with the PPP would leave Musharraf with two choices that would mean his demise, said analysts.
He could either quit or drag out political upheavals with a hostile parliament that would try to oust him on grounds he violated the constitution when he imposed emergency rule.
"He has the graceful option and the confrontational option," said Ijaz Shafi Gilani, chairman of pollsters Gallup Pakistan.
In Washington, U.S. State Department spokesman Tom Casey said: "We certainly would hope that whoever becomes prime minister and whoever winds up in charge of the new government would be able to work with (Musharraf)."
White House spokeswoman Dana Perino said: "We hope that they continue to work with us as partners in counter-terrorism."
Apart from the PML, Musharraf has relied on two other sources of support -- the army and Washington. But Musharraf quit as army chief in November and U.S. support has been stretched thin over what critics saw as his autocratic behaviour over the past year.
Political paralysis has played havoc with management of the economy in the last six months, and Pakistanis have had to struggle with soaring fuel prices, shortages of basic foods and gas, and worsening power cuts.
But investors have appeared impervious to the problems.
The Karachi Stock Exchange's benchmark 100-share index was up 1.05 percent at a record 14,952.26 points in early trade, though dealers said a parliament hostile to Musharraf could be negative for the market.
The KSE-100 was one of Asia's best performing markets in 2007, when it rose 40 percent. It has also been one of Asia's best performing markets this year.
It has gained about 900 percent since 2000, and has recovered all the losses it suffered after Bhutto's murder.
