Rioting erupted in Karachi amid reports that Altaf Hussian, the leader of Pakistan's Muhajir Qaumi Movement (MQM), had been arrested in London.
Buses, rickshaws, and a car were set ablaze in the city, considered the party's power base.
Senior MQM leader Khawaja Izhar ul Hassan appealed to supporters "to remain peaceful, calm, and united" and said the MQM discourages illegal activity.
The unrest started after reports broke that Hussain had been taken into custody in London after police raided his home.
Reports said Hussain was detained in connection with an investigation into money laundering. He had been living in Britain since the mid-1990s.
The Karachi Stock Exchange lost some 400 points on the news.
The MQM was formed to work for the rights of Urdu speakers in Karachi and relies almost entirely on that group for its support in the ethnically divided city.
Based on reporting by RFE/RL's Radio Mashaal, dpa, AFP, and Reuters