Indonesia Riots Continue To

Most Asian markets ignored a record overnight high on Wall Street to drift lower in early trade yesterday, with sentiment remaining focused on the volatile situation in Indonesia.

Regional currencies gained some support from an Indonesian newspaper report indicating that President Suharto may be willing to step down.

At least 10 people were reported to have died in riots in Jakarta on Wednesday, sparking fears of a social breakdown in Southeast Asias largest country and sending many stocks and currencies plunging.

Tokyo stocks were up slightly in early trade, although the market was still on edge amid regional worries, brokers said.

The key 225-share Nikkei average was up 42.90 points, or 0.44 per cent at 15,386.71.

The Australian stock market was also weaker on regional worries. By 0200 GMT the All Ordinaries index was 9.7 points down at 2,764.0.

The Indonesian rupiah collapsed overnight to 11,300 per dollar from 9,000 at the start of the week, after reports of the 10 deaths and news that President Suharto was making a hurried return from a trip to Egypt.

But by 0200 GMT the rupiah had clambered back to be quoted at 10,350/10,550 per dollar.

The US dollar dipped versus the yen in early Tokyo trade as The Jakarta Post report helped support the yen. The dollar was quoted at 133.73/78 yen against New Yorks close of 134.10/20 yen.

South Korean stocks rebounded from a sharp early dip which came on fears of a possible wave of corporate closures.

The composite index was up 4.19 points, 1.18 per cent, at 360.87. The won currency was slightly higher against the dollar.

The Australian dollar also battled its way up from new lows yesterday.

Market nervousness on Wednesday had dragged the Australian currency down in London trading to 62.62 US cents, a level not seen since 1986.

There was a rumour yesterday afternoon that (Suharto) had done a Shah and was not coming back ever, said one Australian dealer, referring to the Shah of Iran.