RP seen rebounding from makati blasts

RP seen rebounding from makati blasts

MANILA (Reuter): A grenade attack in the Philippines' main
business area has intensified security fears and revived memories
of past mayhem but the economy is robust enough to shrug it off,
analysts said yesterday.

Police say the attack, which wounded four people and damaged
the local headquarters of both Shell and Citibank, was probably a
bank raid that went awry.

"Our investigation showed it was an attempted robbery,"
General Job Mayo, Manila's top policeman, said in a radio
interview.

He said police believed the gunmen, armed with grenade
launchers and M-16 assault rifles, had opened fire to cover their
escape after bank guards thwarted a planned robbery.

At least four grenade blasts resounded through the bustling
Makati business district at Wednesday lunchtime, pushing down
both the stock index and the Philippine peso.

The markets had largely recovered 24 hours after the attack,
with the stock index closing 9.68 points lower at 2,933, well off
its day low of 2,913. Brokers said foreign buyers had led the
recovery.

Aggressive Central Bank intervention, including a sharp hike
in overnight interest rates, helped the peso recover to 26.13 to
the dollar by mid-trade yesterday from its low of 26.225 on
Wednesday afternoon.

Mayo's remarks contradicted comments by some politicians and
in the media that the attack was the work of leftists angry at a
recent oil price increase.

Manila flatly denied another suggestion that government agents
themselves staged the attack to justify passage of a
controversial anti-terrorism law pending before parliament.

Business leaders said who was responsible was of less concern
to foreign investors than the fact that the attack could happen
at all in the country's main commercial area in broad daylight.

"It's bad that this can happen in Makati," said Henry
Schumacher, head of the European Chamber of Commerce of the
Philippines.

"That someone is running loose with military arms in the
corporate district of Manila Inc, that's what bothers me,"
Schumacher said in an interview with Reuters.

Urging the government to take clear action to address the law
and order issue, Schumacher said the Philippines had been taking
pains in recent years to attract foreign investment but this was
threatened by incidents such as Wednesday's.

Financial analysts said the economy was now strong enough to
rebound from the attack.

"The Philippine economy of today is significantly different
from that of 1983 when the assassination of one politician can
blow the house of cards down ... The economy has grown, developed
and deepened," Noel Reyes, vice president for research of
Dharmala Securities, said in a report.

The 1983 assassination of opposition leader Benigno Aquino
ushered in a long period of political turmoil that left the
economy in tumble.