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Last Updated: Thursday, 9 September, 2004, 10:29 GMT 11:29 UK
Indonesia shares slip after blast
A policeman near the site of the bomb blast
News of the blast sent markets sliding
Indonesia's financial markets have reacted with shock to an explosion at the Australia embassy, with both shares and the currency sliding.

Shortly after the blast, Jakarta's main stock index had fallen 4%, before recovery to close down 1%.

The slide follows four months in which shares have risen amid hopes for a peaceful presidential poll.

At least eight people are feared killed by what police say was a car bomb, with more than 130 injured.

The explosion hit the embassy at about 0330 GMT, sending plumes of white smoke into the air.

The BBC's Rachel Harvey in Jakarta says the blast left a large crater in the ground and damaged nearby buildings and motor vehicles.

It requires more than one bombing to change that perception that security risks in Indonesia aren't bubbling out of control
Bob Broadfoot, PERC
Suspicion is likely to fall on the militant Islamic group Jemaah Islamiah (JI).

JI has been blamed for multiple previous attacks, including the 2002 Bali bombing - which killed 88 Australians and more than 100 others - and the Marriott hotel bombing close to the site of Thursday's blast which killed 12 in August 2003.

Turnaround

News of the explosion sent the markets into a tailspin.

Shares worth more than 1.5 trillion rupiah ($160m; 90m) changed hands in Thursday's morning session, double the amount traded in the whole of Wednesday.

The slide follows solid gains in recent days, in expectation of a smooth conclusion to the presidential poll runoff later in September.

"It's a bit of a panic," said Edwin Sinaga, a trader at Kuo Capital.

"It might delay the rally that we have expected ahead of the presidential election."

But experts felt that the blast may have limited long-term economic repercussions, particularly given recent successes by security forces against JI members.

"I think foreign investors understand the security risk in Indonesia," said Bob Broadfoot, managing director of Political and Economic Risk Consultancy in Hong Kong.

"They know they haven't been solved but they also don't think they are getting out of control.

"It requires more than one bombing to change that perception that security risks in Indonesia aren't bubbling out of control."


SEE ALSO:
'Three dead' in Jakarta explosion
09 Sep 04  |  Asia-Pacific
Jemaah Islamiah still a threat
15 Aug 03  |  Asia-Pacific



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