Philippine military backtracks in statement on kidnapping blame

MANILA, Philippines -- At the height of the last Abu Sayyaf kidnapping spree, it seemed that just about every crime in the southern Philippines was being blamed on the al-Qaida-linked group. So no one was surprised when police and the military said the guerrillas were responsible for snatching six Jehovah's Witnesses who ventured into one of their stronghold areas.

But after the heads of two captives were found Thursday, the military backtracked and blamed unspecified bandits, raising questions whether the government -- which said just weeks ago that the Abu Sayyaf was decimated and on the run -- was trying to limit damage in a country already suffering from a reputation as Asia's kidnap capital.

The fallout from Tuesday's abductions on Jolo island mounted quickly. The stock market, already worried about a burgeoning budget deficit, fell the following two days, and the peso closed at a nine-month low against the dollar Thursday.