(Recasts, adds quotes) JAKARTA, Oct 13 (Reuters) - Indonesia raised its guarantee on bank deposits to head off a run on lenders and eased central bank rules so as to provide more liquidity, joining a global effort to bolster confidence in the world financial system. The latest measures, announced by Finance Minister Sri Mulyani Indrawati, provided support for the stock market, which reopened on Monday morning after a three-day trading halt. Many had feared Jakarta's stocks would plummet as they caught up with losses seen worldwide at the end of last week, but the benchmark composite index <.JKSE> clawed back up into positive territory by afternoon trade after opening more than 5 percent lower. Indonesia was badly hit by the 1997-98 Asian financial crisis when thousands of people queued outside the country's troubled banks to withdraw their money, the economy collapsed, and riots broke out in major cities, forcing then-President Suharto to resign. This time around, the crisis -- part of a far, far bigger global credit catastrophe -- has been handled more effectively. President Susilo Bambang Yudhoyono, known by his initials SBY, his widely respected finance minister, the central bank, and stock exchange have all introduced measures to calm the markets in the past week, limiting the potential fall-out in the run-up to parliamentary and presidential elections next year. "So far, there has been no impact of the U.S. crisis on local politics, but for SBY, he must avoid the impact of the crisis spreading to Indonesia, he must secure banks and the real sector," said Umar Juoro, chairman of Centre for Information and Development Studies. But some investors are wary that Indonesia could see social unrest if the global crisis eventually leads to job losses against a backdrop of high food and energy prices, and as political tensions increase. "We are looking at an election next year," said Jennifer Tay, Citibank's Head of Portfolio Counselling, Investments for Asia Pacific. "So I would say that the political risk from now until next year is actually going to build up for Indonesia, so I'm rather concerned on the political front." And while the decision to halt trading in some stock markets has sparked criticism from investors who wanted to bail out, Tay said in Indonesia's case "closing the market...was something necessary because if you notice, Indonesia's stock market is actually quite shallow." INSTILLING TRUST Indonesia's move to guarantee up to 2 billion rupiah ($203,000) in bank deposits, up from 100 million rupiah previously, follows similar steps taken by governments across the world aimed at tackling the biggest financial crisis since the Great Depression. [ID:nLD182017] "The government can take preventive action to maintain people's trust in the banking system by increasing the maximum deposit guaranteed by the deposit insurance agency," Indrawati told a press briefing. The rupiah <IDR=> recouped earlier losses after the central bank was seen by traders selling dollars in the market to try to prop up the weakening currency. The Jakarta stock exchange halted trade last Wednesday after the benchmark composite index had dropped by more than 20 percent in just three sessions since Sept. 29. It had been due to reopen its stock market on Friday, but scrapped that decision after a fresh global rout in equities and despite new measures aimed at calming fears that Indonesia's economy faced a crisis. The Jakarta stock market, which had a market capitalisation of $135 billion on Tuesday, has lost 47 percent this year. Traders said sellers were being kept partly at bay a stock exchange's move to impose a 10 percent limit on stock price moves. The introduction of the 10 percent limit, either up or down, will prevent investors from "selling too fast, too quick", said David Chang, head of research at UOB Kay Hian. "Today is going to be more positive because of some measures taken in the stock market to prevent stocks to go down more than 10 percent," he added. In the currency market, traders in Jakarta said the central bank was suspected to be selling dollars at various levels around 9,830. ($1=9850 Rupiah) (Reporting by Adriana Nina Kusuma, Aloysius Bhui, Harry Suhartono, and Olivia Rondonuwu; Writing by Sara Webb; Editing by Kazunori Takada) | 
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