Indonesian banks lead stocks fall on weak rupiah

JAKARTA Wed Jan 9, 2013 6:44am EST

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JAKARTA Jan 9 (Reuters) - Indonesia's stock market slipped 0.8 percent on Wednesday, bucking regional gains and pulling back from a record high set last week, as weakness in the currency led to investor selling on banks.

The rupiah fell as much as 0.8 percent on local corporate dollar demand and as some foreign investors sold domestic bonds, before the central bank was seen stepping in to help the currency end the day little changed.

"The exchange rate significantly weakened today as many investors withdrew funds from the bond market, impacting shares in banks which hold high amounts of sovereign bonds," said a Jakarta-based trader.

Top lender PT Bank Mandiri, which holds about 15 percent of its assets in government bonds in Southeast's Asia's biggest economy, fell 1.2 percent, while fellow state-owned bank PT Bank Negara Indonesia fell 2.6 percent. Other Southeast Asian stock markets gained ground.

Indonesia's benchmark index started 2013 with a record, yet economic concerns could make fund investors turn away this year from a country that high domestic growth transformed into a popular safe haven during global turbulence.

The rupiah was emerging Asia's worst performer last year, losing over six percent, and has continued to fall this year on concern over trade and current account deficits caused by weak exports of commodities such as coal.

Coal firms also dragged down the index on Wednesday, with top miner PT Bumi Resources falling 1.5 percent and PT Toba Bara Sejahtera sliding 10.9 percent. (Reporting by Andjarsari Paramaditha; Writing by Neil Chatterjee; Editing by Robert Birsel)

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