Jakarta - Bomb blasts ripped through luxury hotels in the heart of Indonesia's capital on Friday, killing eight people and wounding dozens in attacks the president said badly hurt confidence in Southeast Asia's biggest economy.

    The attackers targeted the JW Marriott hotel, scene of a car bomb in 2003, and the Ritz-Carlton, both popular with visiting international businessmen and thought to boast some of the tightest security in Jakarta.

    A visibly upset President Susilo Bambang Yudhoyono, re-elected this month on the back of improved security and a healthier economy, told a news conference the bombings were the act of a terrorist group bent on damaging the country.

    "I am sure most of us are deeply concerned, feel very sorry and are crying silently, like the way I am feeling," he said, adding the perpetrators were "laughing and cheering with anger and hatred."

    "They do not have a sense of humanity and do not care about the destruction of our country, because this terror act will have a wide impact on our economy, our business climate, our tourism, our image in the world and many others."

    Police originally said nine people had been killed in the blasts, but later reduced the number to eight. They also said a blast on a toll road in the north of the capital originally attributed to a car bomb was actually a vehicle short circuit.

    How the bombers may have bypassed some of the toughest security in Indonesia remains unclear, but police said a third device had been found and defused in a laptop bag on the 18th floor of the Marriott, prompting speculation they could have gained entry by checking in as paying guests.

    Indonesia's TVOne showed closed-circuit television footage of a man they said was the Ritz-Carlton's suspected suicide bomber. He was wearing a baseball cap and pulling a wheelie-bag through the lobby.

    Financial Markets Fall

    Indonesian financial markets fell after the blasts, with the rupiah down one percent before state banks stepped in with support, and it closed at 10,200. Indonesian stocks fell as much as 2.7 percent before paring loses and closing down 0.6 percent.

    The apparently coordinated bombings are the first in several years and follow a period in which the government had made progress in tackling security threats from militant Islamic groups, bringing a sense of political stability.

    Suspicion was likely to fall on the Jemaah Islamiah militant group, blamed for the previous Marriott attack as well as bombings on the island of Bali in 2002 that killed 202 people.

    The group, which wants to create an Islamic state across parts of Southeast Asia, was blamed for a string of attacks until 2005, but many militants have since been arrested.

    "The attack is particularly severe for investor confidence because ... it has affected the hotels that are seen to be among the most secure in Jakarta and also either killed or wounded numerous prominent expatriate business people," said Kevin O'Rourke, a political risk analyst in Jakarta.

    Tim Mackay, president director of cement maker PT Holcim Indonesia, was among those killed, the company said.

    According to police, the casualties included citizens of Indonesia, the United States, Australia, South Korea, the Netherlands, Italy, Britain, Canada, Norway, Japan and India.

    The Manchester United soccer team canceled the Jakarta leg of an Asian tour. A Ritz-Carlton employee said the team had been due to stay at the hotel ahead of a game in Indonesia early next week.

    Blood on the Street

    Witnesses said the bombings at the Marriott and the Ritz-Carlton were minutes apart and it appeared both had occurred inside the hotel restaurants during breakfast.

    "It was very loud, it was like thunder, it was rather continuous, and then followed by the second explosion," said Vidi Tanza, who works near the hotel.

    An Australian security report on Thursday had said Jemaah Islamiah was poised to strike again. Authorities in neighboring Malaysia? where the group also has roots, said they were stepping up security at government buildings, shopping malls and hotels.

    The Australian Strategic Policy Institute said leadership tensions in Jemaah Islamiah and recent prison releases of its members raised the possibility that splinter groups might now seek to re-energize the movement.

    Sidney Jones, a Jakarta-based expert on Islamic militants at the International Crisis Group, said Jemaah Islamiah as an organization did not appear to be responsible.

    "It's more likely to be a splinter group than JI itself, which doesn't mean you couldn't have JI members but it's very unlikely to be JI as an organization behind this attack," said Jones.

    International reaction to the bombings was swift.

    U.S. Secretary of State Hillary Clinton said the attacks "remind us that the threat of terrorism remains very real," while Australian Prime Minister Kevin Rudd said "this is an assault on all of us."

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    (Additional reporting by Michael Perry in Sydney, Harry Suhartono in Singapore; Writing by David Fox and Sara Webb; Editing by Nick Macfie)

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