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Pakistan's Prime Minister Nawaz Sharif gestures as he speaks to media after appearing before a Joint Investigation Team (JIT) in Islamabad, Pakistan June 15, 2017. REUTERS/Faisal Mahmood

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By Syed Raza Hassan and Drazen Jorgic

ISLAMABAD (Reuters) - Prime Minister Nawaz Sharif's family and allies have rejected a damaging report by a judicial body investigating the Pakistani premier's assets, dismissing as "trash" allegations that the Sharif family has accumulated wealth far above its earnings.

The Joint Investigation Team (JIT), set up by the Supreme Court to investigate corruption claims that surfaced following the Panama Papers leak, spent two months probing the Sharif family's wealth and gave its finding to the court on Monday.

The probe has spooked investors in Pakistan's equity market, with the country's benchmark index in retreat since June over fears Sharif's removal would plunge Pakistan back into chaos after years of relative stability.

While the report was not made public immediately, leaked pages were circulated on social media and opposition leader Imran Khan demanded Sharif resign following the findings, which also levelled allegations against his daughter and sons.

"JIT report REJECTED. Every contradiction will not only be contested but decimated in SC," tweeted Maryan Nawaz Sharif, the premier's daughter, referring to Pakistan's Supreme Court.

The report alleges Sharifs' businesses alone are not enough to explain the family's wealth, which includes flats in an upscale London borough.

It also recommended the National Accountancy Bureau (NAB), an anti-corruption agency, file a case against Sharif, according to Dawn newspaper and other Pakistani media.

The inquiry has gripped Pakistanis and, after it was handed to the Supreme Court, the stock market plunged 3.1 percent early on Tuesday to trade at 44,800 points by 10.10 am (0510 GMT).

"The market has taken the suggestions for a NAB (investigation) and the overall JIT report as a negative," said Saad Hashmey, research director at brokerage Topline Securities.

"We expect volatility to continue," he said.

Asif Khawaja, Pakistan's defence minister and one of Sharif's closest aides, said the report was "full of flaws" and the ruling PML-N party would contest the JIT findings in the Supreme Court.

"Its trash," Khawaja said.

The Supreme Court will now decide how to proceed with the report and whether to call for a trial. There were also calls for Sharif to be disqualified.

Sharif has always denied any wrongdoing over his family allegedly using offshore companies to buy luxury flats in a posh London neighbourhood, and said his family wealth was acquired legally.

In April, the Supreme Court ruled that there was insufficient evidence to remove Sharif from office - by a split 2-3 verdict - on the back of the Panama Papers leaks, but it ordered further investigations.

The JIT team comprised members of civilian and powerful military bodies, including the Inter-Services Intelligence agency. However, the probe became politicised as Sharif's backers and opponents sparred over the JIT's work and the allegiance of its members.

Sharif's allies have alleged there was a conspiracy against him, but opponents say the premier was trying to use such talk as a smokescreen to cover the serious allegations he faces.

Khan, the leader of the opposition Pakistan Tehreek-e-Insaf party, said Sharif "has now lost all moral authority" and must resign immediately.

(Additional reporting by Asif Shahzad; Writing by Drazen Jorgic; Editing by Paul Tait)

Reuters