Uncertainty over Prime Minister Dr Mahathir Mohamad's future should not have a negative impact on the economy, a senior minister said today.

However, analysts said the uncertainty following Mahathir's surprise weekend announcement he intented to resign - followed by a retraction soon after - would hurt the share market and possibly the wider economy.

Minister of International Trade and Industry Rafidah Aziz said Mahathir would continue as premier but party sources and diplomats said Mahathir is expected to quit soon, despite retracting his resignation from his party posts.

"The prime minister's intention to resign should not have an impact on the economy because the world knows, all Malaysians know he (Mahathir) has mentioned repeatedly before that one day he will step down and we must prepare for that," she told reporters.

But share prices slid Monday in response to the political uncertainty, dealers said.

The Kuala Lumpur Stock Exchange composite index closed down more than two percent.

Dealers said the market was expected to remain weak in the near-term.

Rafidah said it was "unfair" for Mahathir, 76, to announce his resignation during the Umno general assembly, without preparing the party for it.

"If we know the direction, expectations can be met and there will be no speculations, no worries, no anxieties and no doubts, whether in or outside the country," she said.

Rafidah said all industries, the business community and the public should not speculate on the issue but carry on business as usual.

"No way that the Prime Minsiter will retract his decision (to continue to be prime minister).

"We interacted with him in no uncertain terms and he cannot just do this. I can assure you that the Prime Minister will not resign. No way. He is going to continue as Prime Minister," Rafidah said at a press conference after launching the 2001 annual report of her ministry.

Weak market

Kelvin Miranda, investment strategist at Meridian Asset Management, said the market is likely to remain weak until the uncertainties over Mahathir's future and his successor are resolved.

A fund manager from another asset management company warned shares could fall further.

"It's quite negative. Mahathir had a say in so many things. Everything is now at a standstill and will be put on hold. As a company, you can announce a major project but who will authorise it? I think there will be further selling this afternoon when the US and Europe markets come on stream," the fund manager said.

"Malaysia has usually been viewed as a politically stable country and now that is no longer the case," he added.

"Who is going to be the next finance minister?" one dealer said.

Untimely

The Associated Chinese Chamber of Commerce and Industry described

Mahathir's actions as "untimely".

"The business community as a whole still needs Dr Mahathir's able

stewardship," said the association's deputy secretary general David Chua.

Rafidah, who was among the party leaders who convinced Mahathir to retract

his resignation on Saturday, called on the business community to carry on as

usual.

"We interacted with (Mahathir) in no uncertain terms and he cannot just do

this. I can assure you that the prime minister will not resign. No way. He is

going to continue as Prime Minister," Rafidah said.

Mahathir left the country within hours of creating pandemonium at the

meeting and is reportedly holidaying in Naples in Italy.

Although some opposition politicians have suggested that his resignation

was simply a ploy to rally support, party sources and diplomats said Mahathir

was expected to step down soon.