UPDATE 2-Vietnam suspends stock trading after technical problem

(Adds exchange statement suspending trading on Wednesday)

HANOI, May 27 (Reuters) - A computer system problem halted trading on the Ho Chi Minh Stock Exchange .VNI on Tuesday and trade would also be suspended on Wednesday, the exchange said.

The nearly 8-year old market, which jumped 23 percent last year amid investor excitement about Vietnam's economic potential but has since slumped 55 percent to be the worst performer in Asia so far in 2008, has occasionally been hit in the past by technological problems.

The exchange said in a statement that while waiting for the system to resume normal operation, it "is going to extend the suspension of trading activities through May 28, 2008."

The statement by exchange director Tran Dac Sinh did not say when trading would resume.

On Monday, the market index closed down 1.76 percent at 420.51 points, marking three weeks of steady declines within a trading band of +/- 2 percent, which was imposed by the State Securities Commission regulator to stabilise the market.

Earlier this month, market liquidity hit its lowest level in two years, an unintended victim of the government's battle to try and reduce double-digit inflation and a liquidity crunch at banks.

The government estimated on Tuesday that annual inflation accelerated to 25.2 percent in May from 21.4 percent in April, one of the highest rates in Asia [ID:nHAN288370].

Meanwhile, the smaller over-the-counter Hanoi Securities Trading Centre .HASTCI closed 1.8 percent lower at 123.2 points on Tuesday.

The combined market capitalisation of the two exchanges is about $15 billion with foreign investors accounting for about 20 percent of daily trading on the main exchange. (Reporting by Ho Binh Minh and Grant McCool; Editing by Anshuman Daga)