Concerns about an economic slowdown in the US following the release of worse-than-expected housing data in that country also dampened the stock-market sentiment.

The Stock Exchange of Thailand (SET) Composite Index began the day with a tumble shortly after news of the explosives being

discovered near Thaksin's house and continued downward to close at 692.17, off the day's

trough of 688.05. Turnover was sluggish at Bt9.64 billion.

Foreign investors, who have bought Thai shares worth a net value of Bt21.45 billion since early last month, turned yesterday to unload stocks with a net worth of Bt639.58 million.

Warut Siwasariyanon, head of research at Globlex Securities, said the SET had taken a cue from a sharp fall in global markets and that the sentiment worsened following news that explosives were found near Thaksin's house.

Police arrested a man identified as an Army official working in the Internal Security Operations Command after he parked the

car, loaded with TNT, fertiliser and C4 explosives, near Thaksin's residence.

"From now on, political issues will put pressure on the Thai stock market," said Warut. "We don't know for sure whether the next general election, set for October 15, will be delayed."

He predicted the SET would tend to fall further today in the absence of fresh positive news.

Kiatkong Decho, head of research at Sicco Securities, echoed Warut's remarks, saying political uncertainty continued to cast dark clouds over the Thai stock market.

He said investors should closely watch whether the October 15 election is postponed.

Another cause of the SET's poor condition is a change in foreign investors' views of Asian stock markets. Kiatkong said they began to sell following significant appreciation of currencies against the US dollar.

However, he predicted this would be a short-lived phenomenon, because the value of the greenback would tend to depreciate further in the future.

Kiatkong said PTT Chemical Plc's capital-increase plan was another cause for the stock market's sharp decline. PTT Chemical's stock lost 4.55 per cent to Bt84.

"Many institutional investors sold to reduce their risk exposure, amid fears of the rising political temperature," said a Syrus Securities analyst. "But the index did not fall further, because of cheap blue-chip valuations after recent declines."

Bank of Thailand governor MR Pridiyathorn Devakula said he could not yet tell what impact the Thai economy would suffer from news about the explosives found near Thaksin's home.

However, he gave assurances that the Thai economy remained solid.

Federation of Thai Industries vice chairman Adisak Rohitasune said some people believed the country's Industrial Confidence Index had bottomed out at 81.4 points last month. However, chances are the index will plunge even further, because the political situation is growing worse.

"Businessmen can accept the fact that the election date may have to be delayed beyond October 15 pending the coming of the new Election Commission," Adisak said. "But if it has to be delayed for other reasons, then the Confidence Index will be further eroded."

He said yesterday's discovery of explosives hidden in a car near Prime Minister Thaksin Shinawatra's house would damage Thailand's business environment.

"We must be careful. Vietnam recently announced its ambition to become the Detroit of Asia - if Thailand was still having political problems," he said.