The Jakarta Composite Index fell 10.30 points, or 0.3 percent, to close at 3,058.98, dropping for the second straight day.

Some 3.68 billion shares worth Rp 3.48 trillion ($389.76 million) changed hands. Losers were even with gainers, 96 to 96.

Since most Indonesian companies have issued their first-half earnings, the market lacks a strong incentive to move higher.

Financial stocks were the biggest drag on the JCI after the government released its inflation report, which was seen as adding pressure on the central bank to increase borrowing costs.

Inflation accelerated to 6.22 percent from a year earlier. Data showed July inflation accelerated to its highest level since April 2009, fueling market expectations that the central bank may raise interest rates later this year.

Bank Rakyat Indonesia, the country’s second-biggest bank by assets, fell 4.6 percent. Bank Mandiri, the largest, slipped 2.5 percent.

Adaro Energy, the country’s second-largest coal producer, advanced 2.5 percent. The company said coal-sales volume in the second quarter gained 13 percent to 10.29 million metric tons and sales volume in the first half rose 22 percent to 21.75 million tons.

International Nickel Indonesia, the nation’s biggest nickel producer, jumped 6.1 percent to 4,375, its highest close since May 14. The company’s first-half net income rose to $218.8 million from $34.58 million a year earlier. Sales in the period climbed to $619.2 million from $276.36 million a year ago, it said.

Pabrik Kertas Tjiwi Kimia, an Indonesian paper producer, surged 25 percent to Rp 2,450, its steepest increase since May 2007. The company reported its first-half net income rose more than fourfold from a year earlier to $74.4 million.

Meanwhile, the rupiah edged higher to trade at 8,943 to the dollar as of the stock market’s close.

Earlier, traders spotted dollar-buying intervention by state banks to cap the rupiah as it tries to break 8,940.

Investors have flocked to Indonesia’s stock and bond markets to cash in on the country’s solid economic growth and expectations of further currency gains.

US gross domestic product increased at a 2.4 percent annual pace last quarter, less than expected by most economists, data from the Department of Commerce showed on Friday.

A report from the Institute for Supply Management on Monday in the United States may show growth in July’s manufacturing cooled, according to a Bloomberg survey of economists.

Posted by Shayne Heffernan on Aug 2nd, 2010and filed underAsia, Equities, Latest News, Markets, News & Events.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site