The swift and bloodless end to the 22-hour mutiny late Sunday may have mitigated the damage to the country's reputation but much hinges on how the investigation is carried out and whether the instigators are punished, analysts said.

The local currency fell to a low of 54.60 pesos to the dollar before reaching 54.38 late in the day, down from 54.010 on Friday last week. The key Philippine Stock Exchange composite index closed 2.11 percent lower at

"The military uprising will keep the market weak in the coming days. There's smoke, which means there's fire, and which is something the government must address," Summit Securities president Harry Liu said.

Analysts said the failed military mutiny has highlighted political risks for regional currencies brought by possible leadership changes in the next 12 to 18 months in Philippines, Indonesia, Malaysia and Thailand.

"Political risks will be a key theme in Asia," said Jimmy Koh, chief economist of United Overseas Bank in Singapore.

In the country's eighth coup attempt in 17 years, about 300 soldiers seized a portion of the upscale Ayala Centre in the Makati business district and demanded the resignation of President Gloria Arroyo and her defence minister, accusing them of corruption.

A day after the shopping and entertainment center was transformed into a battle zone strewn with explosives, shoppers and office employees returned in droves as malls, cinemas and hotels reopened.

On the stock market, Ayala Land, operator of the Ayala Center, dropped 10 centavos to 6.60 pesos while parent Ayala Corp. was unchanged at 4.80 pesos.

"We feel among other things (that) the Philippines' reputation has been damaged. There's a stigma once again and a reminder to people that this type of military action is possible within the Philippines and it's a scary lot," said Guillermo Luz, executive director of the elite Makati Business Club.

Paul Shymyck, a Singapore-based economist with research house IDEAglobal, said investors will likely re-assess their exposure in the Philippines.

"People had thought that the military has gotten out of politics. The Philippine incident just shows that the military is still a force in many Asian countries."

Barclays Capital said that following the beating taken by the peso, the equities market and sovereign bonds, "the sell-off in Philippine assets in the coming days may be significant."

Philippine assets may remain weak "as it may take a long period of time for this political premium to diminish -- certainly ahead of presidential elections next year," it said.

Comparisons are being made with the bloody 1989 coup attempt which set back the country economically by six years.

Analysts said the new revolt could push back the economy by one and a half years and limit the country's ability to grow faster than its official growth target of 4.3 percent for 2003.

"It really is more of a standstill now rather than fleeing the Philippines. There is some reluctance to do anything at all. There is a wait and see attitude for now," said Luz Lorenzo, an economist with ATR Kim Eng Securities.

Luz of the Makati Business Club said a return of investor confidence would rest on the government's handling of the investigation, citing precedents in the past when coup plotters went unpunished.

Takahira Ogawa, Asia Pacific director for sovereign ratings at Standard and Poor's, said the credit risk evaluator was maintaining its BB long-term sovereign debt rating for the Philippines despite the failed rebellion.

"We don't see it (affecting) the debt payments of the Philippines," he said, adding however that "if there are more developments that call for a re-rating then we will review it."

But Luz said that to restore investor confidence, "I think we have to go into some sort of renewed efforts to fix this country. This is a country that needs a lot of fixing."

WAR.WIRE