Shares end down as telecommunications and cigarette stocks continue to fall

Shares end down as telecommunications and cigarette stocks continue to fall

Dow Jones, Jakarta

Indonesian shares ended lower on Tuesday for the second consecutive day as investors continued to take profit in telecommunication and cigarette blue chips, dealers said.

"Selling in these blue chips pushed the main index lower," said a trader with BNI Securities.

Dealers said overall sentiment remained weak because of renewed fears that the Indonesian central bank will raise interest rates to combat inflation stemming from higher fuel prices.

The government has said it plans to cut fuel subsidies later this year to reduce the 2005 budget deficit.

The Jakarta Stock Exchange Composite Index ended down 3.805 points, or 0.4 percent, at 1011.67 points, up slightly from an intraday low of 1005.20 points.

Decliners led gainers 65 to 53, with 75 stocks unchanged.

Volume was 1.55 billion shares valued at Rp 1.8 trillion, compared with 2.17 billion shares valued at Rp 1.8 trillion on Monday.

Telekomunikasi Indonesia fell 2 percent to close at Rp 4,850 on profit-taking and after its American Depositary Receipts in New York closed 3.6 percent lower on Monday at $21.10.

Telkom's rival Indonesian Satellite dropped 3.3 percent to end at Rp 5,950, also on profit-taking and after its ADRs closed down 3.2 percent at $33.15.

The telecommunication companies also fell on Monday after sharp gains last week.

Profit-taking also hit cigarette maker Gudang Garam, which closed down 0.7 percent at Rp 14,050, and rival Hanjaya Mandala Sampoerna, which dropped 1.4 percent to Rp 6,900.

Bucking the trend was Bank Danamon, which ended up 1.8 percent at Rp 4,325, and oil and gas producer Medco Energi, which jumped 7 percent to Rp 2,250 on a rebound.

Dealers said they expect the market to trade slightly higher Wednesday on a rebound after the main index's fall in the previous two sessions.

The rupiah closed higher in active trading on Tuesday ahead of a key meeting of lenders on hopes that any debt relief for the country will ease demand for the U.S. dollar this year, dealers said.

The rupiah closed at 9,285 per dollar, down from its close on Monday at 9,295.

"Foreign market participants built fresh short (dollar positions) today," said a dealer with a European bank in Jakarta. "The amount was quite healthy."

The Paris Club lenders are scheduled to meet on Wednesday to discuss a debt relief package for countries affected by the December tsunami disaster.

Dealers, however, said that healthy demand from local importers prevented the greenback from falling further. They said that state-owned oil and gas company Pertamina was suspected to be among the main dollar buyers, likely to finance higher fuel imports.

A senior official with Pertamina had told reporters on Monday that the company would boost its import of jet fuel amid increased efforts to airlift humanitarian aid to areas affected by last month's catastrophe.

Dealers expect the dollar to trade between Rp 9,270 and Rp 9,300 on Wednesday.