"Concerns would be heightened if the attacks prove to be an escalation of the separatist insurgency - though neither the identity nor the motive for the latest attacks is known at this point - or if the attacks signal the onset of a violent backlash from the September military coup," said the agency's vice president, Thomas Byrne.

Moody's has said that a sustained escalation of separatist violence outside the southern border provinces would be a negative credit factor for the country.

The market yesterday still experienced the aftershock from the bomb attacks that left three dead and 38 injured. The Stock Exchange of Thailand composite index dropped by 11.03 points, or 1.67 per cent, to 648.22.

Byrne said Thailand's external payments and fiscal positions had improved significantly since the 1997 financial crisis, supporting the government's Baa1 bond ratings. The budget has been balanced or in surplus since 2003, international reserves have risen above US$64 billion (Bt2.3 trillion) and foreign direct investment has swollen to record levels in the last two years - with net inflows of more than $8 billion through the first 10 months of 2006.

"An escalation of violence that deters new investment in Thailand would have negative implications for Thailand's credit fundamentals," said Byrne.

"More broadly, a shift by the post-coup leadership in economic or political policies that makes the investment climate less hospitable than under the Thaksin administration would also have negative credit implications."

Byrne added that a restoration of confidence in the Kingdom's democratic and constitutional institutions would help underpin economic and financial stability over the long run.

Seamico Securities said yesterday it was optimistic that the bombings would have limited and short-term impact. "Therefore, we have retained our projections of commerce companies under our coverage in the commerce sector," it said.

However, the blasts near superstores may cause customers to feel insecure when shopping there. Seamico expects Big C Supercentre and Siam Makro to be negatively affected, but CP 7-Eleven would benefit as customers change their shopping behaviour to buy things from convenience stores.

Cencar, operator of Carrefour, reported that its sales on New Year's Eve were 30 per cent lower than targeted as panicked shoppers rushed home.

Loic Tardy, chairman of Unilever Thai Trading, told Krungthep Turakij that the group had maintained its business plan for the year. Despite low consumer confidence in the past 10 months and the bombings, the group is committed to boosting spending and market share amid fierce competition.

Next week, Unilever will hold a meeting where department chiefs will start expediting business plans.

"We will roll on new products as planned," Tardy said, adding that once the election takes place later this year, the political situation should return to normal.

The Pacific Asia Travel Association (PATA) said that in spite of the incidents, members were reporting that most of their guests were continuing with their travel plans in Thailand.

As of yesterday, feedback from key tour operators, Tourism Authority of Thailand overseas offices and hoteliers indicated minimal cancellations.

PATA president and CEO Peter de Jong condemned the attacks as cowardly and senseless and urged the government to move quickly to apprehend the parties responsible. "We encourage people who were planning to travel to the Kingdom to continue with their plans," he said.

"We believe that these were isolated attacks and do not find it necessary to postpone any planned trips to Bangkok," said Asian Trails managing director Roger Haumueller. He said clients in Bangkok were unaffected by the bombs and none wanted to alter their programmes.

PATA will continue to monitor the situation over the coming days and weeks to assess the impact of the bombings on forward bookings.

Bangkok Bank's macroeconomic analysis centre believes the economic impact from the bombings should be minimal if the situation soon returns to normal. However, it warned that if further attacks happen, growth in gross domestic product could fall by between one-half and a full percentage point this year.