Karachi port is the main gateway for Western military supplies bound for Afghanistan and serious insecurity could disrupt shipments and pile pressure on the government.
While the violence has been confined to targeted tit-for-tat shootings, there are fears street clashes could erupt in the country's commercial hub, which is home to its main port and financial markets.
The country's main stock exchange has ignored the violence but analysts say any escalation is likely to hurt the fragile market.
The violence in the city of 16 million people is between Karachi's dominant political force, the Muttahida Qaumi Movement (MQM), and a breakaway faction known as the Mohajir Qaumi Movement, or Haqiqi group, as they vie for influence.
Karachi police chief Waseem Ahmed told Reuters that 26 people had been killed in targeted attacks this month up to Sunday, with most of the dead members of the breakaway faction. Other police officials said five people were killed on Monday.
"Karachi is totally anarchic at the moment as there is a serious command and control problem in the political factions," said Mutahir Ahmed, a professor of international relations at the University of Karachi.
Stock analysts say investors are getting used to daily violence in the northwest, although fighting in the Swat valley northwest of Islamabad has unnerved the market over recent weeks.
But violence in Karachi has a more direct impact.
"If the trouble escalates, that could potentially be the last nail in the coffin for our market," said Sajid Bhanji, a dealer at brokers Arif Habib Ltd.
The index, which has gained about 18 percent this year after losing 58.3 percent in 2008, was slightly up on Monday morning.
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