(Recasts with Anwar’s refusal to meet police, adds details)
By Liau Y-Sing
KUALA LUMPUR, July 14 (Reuters) - Malaysian opposition figure Anwar Ibrahim refused to meet police on Monday over sodomy accusations against him, his lawyer said, challenging the authorities to serve an order on him.
Analysts warned of increasing financial fallout from the political drama.
Anwar, who is leading a charge by a rejuvenated opposition to unseat the government, had earlier agreed to meet police at 2 p.m. (0600 GMT) on Monday to give his statement on a sodomy complaint brought against him by a former aide.
But his lawyer Sankara Nair said Anwar would not go as planned, to protest an attempt by the police to serve an order on him after he had agreed to go voluntarily.
"This was totally unnecessary given that we were all in an unconditional agreement, in advance, that our client will appear," Sankara said in a statement.
He said Anwar would now meet the police if he was served an order. Police declined to say if Anwar would be arrested.
Malaysia’s protracted political problems, which began after the government’s dismal showing in a March poll, have wearied foreign investors, fearful a sudden change of government could scuttle efforts to reform the civil service and judiciary.
The ruling Barisan Nasional coalition faces its worst crisis in 50 years, hit by public anger against rising prices, political scandals and a revived opposition snapping at its heels.
"Anwar is now on the offensive, which may cause some jitters but investors are generally looking at the whole region, at more interesting markets like Thailand and Singapore," said Stephen Kwong, a trader with AmInvestment Bank.
The Malaysian stock market had slipped half a percent to 1,144.68 by 0359 GMT.
Anwar’s decision came as police blanketed parts of the city in heavy security to prevent an opposition-led rally called to show support for Anwar and a planned no-confidence parliamentary debate against Prime Minister Abdullah Ahmad Badawi.
Looking to avoid a repeat of Anwar-led protests a decade ago which drew tens of thousands onto the streets, police got a court order to prevent a mass gathering outside parliament, where the opposition had tried to call for the debate.
But the parliament speaker did not allow the motion to be debated on grounds some of the issues it raised had been dealt with in a government motion approved last month.
Opposition lawmakers staged a walkout after the parliament speaker rejected the motion.
By noon, there were no signs of protesters outside parliament although a spokesman for the opposition People’s Justice Party said some had gathered in several other parts of the city.
Police also mounted roadblocks at various points and put security personnel on standby. Helicopters circled overhead at the parliament building.
"The rally, being illegal, could be moved anytime so we have to be ready," police official Abdul Khalid Abu Bakar was quoted as saying by the New Straits Times.
The prime minister has tried to fend off calls for him to quit by promising to hand over power to his deputy Najib Razak in mid-2010.
Opposition leader Anwar was sacked as deputy prime minister in 1998 and then jailed for corruption and sodomy after leading street protests against then premier Mahathir Mohamad’s government during the Asian financial crisis.
The supreme Court overturned the sodomy conviction six years later. (Additional reporting by Niluksi Koswanage and Faisal Aziz, Editing by Jerry Norton)