Malaysia's Anwar charged with sodomy, granted bail

By Jalil Hamid and Niluksi Koswanage

KUALA LUMPUR (Reuters) - Malaysia's leading opposition figure Anwar Ibrahim was charged with sodomy and granted bail by a court on Thursday, letting him campaign in a by-election on which he is staking his political future after a 10-year absence.

Anwar, 60, denied the charge that he had sex with a 23-year-old male aide and was bailed until his next court appearance on September 10.

This will allow Anwar to contest a by-election on August 26 in which he is the favorite. Investors have been unsettled by the high-stakes political battle to control an economy where government dispenses billions of dollars of patronage projects.

This is the second time in a decade that Anwar, a former deputy prime minister who had been groomed for the top job by the governing United Malays National Organization, has faced sodomy charges in the majority Muslim country.

"I am pleased with this decision (bail). I will proceed with my campaign," Anwar told reporters after the court appearance, where he was accompanied by his wife and daughters.

If he is found guilty, Anwar could be imprisoned for up to 20 years, effectively ending the career of a man who has long coveted the top job in Malaysia and who was only allowed back into politics in April following his release from jail in 2004.

The political uncertainty surrounding the trial and speculation on the future of Prime Minister Abdullah Ahmad Badawi has hurt the stock market and the ringgit currency, which on Thursday hit a 6-month low against the dollar at 3.2840.

"There is a risk that the political situation (in Malaysia) deteriorates significantly in the coming weeks," Credit Suisse analyst Stephen Hagger said in a research report on Thursday.