JAKARTA, 10 January 2006 - Indonesia shares ended at a record high Monday buoyed the central bank's move to defy market expectations and not hike its benchmark Bank Indonesia rate for the first time since July, analysts said.

Bank Indonesia's decision to leave its key rate unchanged at 12.75% helped sustain a market rally as investors saw the bank's decision as proof positive that a twin trend of rising inflation and higher rates to trim that inflation was nearing an end, Kahlil Rowter, head of research at Mandiri Sekuritas, told Dow Jones Newswires. "(Bank Indonesia's decision) is positive for the rupiah and the stock market," Rowter said.

The Jakarta Stock Exchange Composite Index ended up 1.87%, or 22.805 points, to hit a record closing high of 1245.054. That result surpassed the previous record of 1222.249 on Friday, which was spurred by a resumption in January program buying in certain bank, mining and automotive blue chips. Gainers led decliners 105 to 29, with 55 stocks unchanged. Volume rose to 2.2 billion shares valued at IDR2.3 trillion.

Bank Mandiri, the nation's largest lender by assets, rose 7.18% to IDR1,940 on expectations that a central bank plan to suspend a stricter regulation on banks' nonperforming loan classification would boost Mandiri's bottom line in 2006. Other bank sector stocks also rallied. Bank Internasional Indonesia rose 9.38% to IDR175 while Bank Rakyat Indonesia increased 3.01% to IDR3,425.

Market expectations of higher earnings from soaring prices of mineral commodities on the global market helped swell mining giant Aneka Tambang's share price 6.92% to IDR,4250. Blue chip automaker Astra International recorded a 3.21% increase to IDR11,250 on expectations of higher dividends in 2006.

Rowter cautioned that the recent stock price surge is likely to begin to falter when trading restarts after Tuesday's Idul Adha national holiday. "Stock prices are already above analysts' predictions (so) a technical correction is more likely than a further rally if there's no further good news," he said.

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