Two small bombs exploded in Manila about 75 minutes before Arroyo's taped announcement was broadcast, briefly raising fears that the president might extend emergency rule.
   
There were no casualties or damage from the blasts near the headquarters of an elite police team and a shopping area in the upmarket Ortigas district.

Police said the explosions were caused by crude devices and were no cause for alarm.

In a nationally televised address, Arroyo said: "At this moment, I am calling off the state of emergency."
   
"I firmly believe that order has been restored," she added.

"It is important that our political enemies and opportunists stop troubling the economy and embarrassing the Philippines because of their nonsense shows," she said.

"I will never allow this kind of adventurism."

Security levels lowered

Financial markets had priced in an imminent lifting of the
emergency order but were rattled slightly by the blasts.

Renegade soldiers are accused of
a coup plot against Arroyo

The peso weakened to 51.26 per dollar from 3-1/2-year highs
around 51.13 before recovering to 51.19 by the midday break.
The main stock index closed 0.34% lower. 

Jonathan Ravelas, chief market strategist at Banco de Oro Universal Bank in Manila said "next week, I expect the peso to test 51."

"With the lifting of the state of emergency, the focus of financial markets will shift back to fundamentals."

Television reported one explosion near the Metrowalk shopping area and the other in a vacant lot used as a carpark that separates the police office and the shopping area.

Maximum security levels in the capital were lowered on Thursday after officials said the threat of a possible coup from leftist opponents and rebel soldiers had receded.

Arroyo, who survived an impeachment attempt last year over allegations of vote-rigging and graft, invoked the emergency to confront what she said was a conspiracy of opposition foes, communist groups and "military adventurists" to oust her.