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rices on the Indonesian Stock Exchange (IDX) further declined on Tuesday as foreign investors continued selling assets, worried that the US would scale down its economic stimulus and concerned by slow growth in the Chinese economy.

The benchmark Jakarta Composite Index (JCI) fell 3.5 percent on Tuesday to end the day at 4,609.95 an 11 percent drop after its May 20 high.

The one-day fall was the worst since June 4, 2012, making the drop in the last four trading days 8.2 percent, unseen since September 2011.

Securities analysts say the fall occurred across the board as the selling spree by foreign institutional investors continued to dominate trading. Foreign investors are dumping their Indonesian stock, worried that the Federal Reserve will scale back quantitative easing.

Thendra Crisnanda, analyst at PT BNI Securities, said foreign institutional investors bailed out of local stocks, running scared of US economic policy and a gloomy outlook for China. With such unfavorable forecasts, many foreign investors took profits, he said.

'Today's drop of nearly 4 percent was fair because the market rose too fast in past months,' Thendra added.

Budi Hikmat, chief economist at Bahana TCW Investment Management, said selling pressure persisted due to widespread and obvious concerns that an increase in the price of subsidized fuel would kick off inflation, which would in turn affect growth.

The steep fall in shares followed a sell-off which also took place in other regional markets. Japan's Nikkei 225 fell 1.45 percent on Tuesday, while Thailand's SET Index had the biggest fall in more than two years (4.97 percent). Philippines' SE Index dropped by the most since September 2011 (4.64 percent).

Foreign investors have been net sellers on the IDX for 12 consecutive days with a staggering Rp 3.98 trillion of net sales on Tuesday. The rupiah continued its plunge, going as low as 10,111 per dollar in midday trading, before closing at 9,828, according to Bloomberg. Reuters quoted the currency as low as 10,117.

'The rupiah was struck by both internal and external factors,' Bank CIMB Niaga currency analyst Mika Martumpal said on Tuesday.

'Internally, we are facing economic slowdown and a rising deficit that will certainly concern investors. On the external side,the US economy is showing signs of improvements, meaning that there is a stronger possibility that the US will soon scale down its quantitative easing,' he explained

The government's sukuk auction on Tuesday ended in failure, with the Finance Ministry's debt management office failing to reap a single rupiah from the auction.

Many investors instead sold their Indonesian bonds amid expectations of a rise in interest rates overseas.

Analysts have warned of potential outflow in the bond market, mainly due to depreciation of the rupiah.

'Our calculations predict there is at least a potential outflow of Rp 10 trillion [US$1.02 billion] if the US dollar stays higher than Rp 9,900,' Mandiri Sekuritas fixed income analyst Handy Yunianto wrote in a research note.

Finance Minister Chatib Basri has declared that there should not be unwarranted anxiety over the JCI decline as the same trend is apparent in other indices in the region.

'The Hang Seng, Nikkei and Thailand's SET also saw a significant drops,' the minister commented.

He also took time to calm concerns over fuel subsidy uncertainty, blamed as the prime factor behind the foreigners evacuating the stock market. In May, Chatib warned lawmakers of the potential for mind-boggling capital outflow if they failed to raise fuel prices.

'The market should not be concerned with fuel subsidies. The government will definitely raise the price of subsidized fuel. We're in the process of arranging it, as well as preparing the social protection scheme. After the fuel price increase, imports will decline, and consequently lead to an improvement in the trade balance,' he told The Jakarta Post on Tuesday.