(AFP) The decision by the second son of Prime Minister Mahathir Mohamad to quit the business world helped boost Malaysia's stock market today.

Mokhzani announced late yesterday he was quitting business because of false allegations of favouritism which tarnished his and his father's names.

"Lately there have been many wild allegations linking me with government projects or mega-projects which are not true and I feel this is an irresponsible move to tarnish my name and that of my father's," he said.

Mokhzani has resigned as chief executive officer of Pantai Holdings and executive chairman of Tongkah Holdings and sold his stake in both firms. He said he would also sell holdings in all other locally listed companies.

Dealers said the news was seen positively as a sign Malaysia is improving poor perceptions about the way it does business. The Kuala Lumpur Stock Exchange composite index ended up 5.98 points at 585.87.

Soap-maker

The new owner of Pantai, Lim Tong Yong, is the founder of soap-maker PAOS Holdings.

OSK Research manager Pankaj Kumar said speculation about Mokhzani's departure ranged from politics to pure business decision-making.

"Some will say it's because of politics, others will say he just wants out of the business scene," he told AFX-Asia , an AFP-owned financial newswire.

A senior analyst with a foreign brokerage said Mokhzani's move was unlikely to have a lasting impact on the market.

"If anything, it will improve (the senior) Mahathir's image. It will certainly remove the (nepotism) labellings," he said.

Mahathir's other two sons have also had business interests.

Mirzan, the eldest, in 1996 listed his shipping and logistics company Konsortium Perkapalan. Later that year it acquired Pacific Basin Bulk Shipping.

Youngest son Mukhriz has had interests in Reliance Pacific and Opcom Cables.

In July last year the premier defended his sons' business interests and said they did not benefit from favouritism.

He said it would be unrealistic to stop them being involved in business just because he is prime minister.

"I cannot say, look here, your father is prime minister, please be poor. You have to be realistic," Mahathir senior said.