A Chilean court on Wednesday rejected Peruvian government's request to extradite former Peruvian President Alberto Fujimori, saying Peruvian prosecutors had failed to demonstrate beyond reasonable doubt Fujimori's involvement in death squads and corruption.

The Peruvian government accuses Fujimori of committing bribery, misusing government funds and sanctioning 25 death squad killings during his 1990-2000 rule.

The verdict is open to appeal by Peruvian state prosecutors.

In Lima, Peru's Justice Minister Maria Zavala said she was surprised by the ruling and vowed to appeal to Chile's Supreme Court, which has the final say on the case.

"We are confident (of winning the appeal), but we want to read the Chilean judges' decision carefully," said Zavala.

"Perhaps we have lost the battle but not the war," the minister said.

At least 200 people gathered outside the Chilean embassy in Lima in protest at a Chilean judge's refusal to extradite former Peruvian President Alberto Fujimori.

Brandishing banners, the protestors shouted "murderer," "criminal" and "thief" in reference to Fujimori. They also called on the Peruvian government to continue its fight for Fujimori to pay the price for what they called "two-terms of crime."

Fujimori welcomed the ruling and claimed his innocence again.

"I respect the way Chile's courts have acted," Fujimori said in a statement.

He said the ruling "expresses, as I have always proclaimed, my complete innocence" as he "never took part in those actions which my political detractors, without foundation, have accused me of taking part in."

Chilean President Michelle Bachelet said the ruling would not impose any negative influence on the two nations' relationship.

"We have relationships based on a joint working agenda which is beneficial to both governments," she said.

But Jaime Naranjo, president of Chilean Senate's human rights commission, told local media that the ruling "damages the nation's international image, because it backs human rights violations."

Fujimori, 68, fled to Japan in 2000 after his government collapsed amid corruption scandals. The son of Japanese parents, he claimed Japanese citizenship on reaching the country, and the Japanese government has since ignored repeated extradition requests from Peru, where he faces 10 charges of corruption and two of human rights violations.

The former president arrived unexpectedly in Chile in November 2005 by a private flight from Japan. He is now being held under house arrest in the Chicureao neighborhood on the outskirts of Chile's capital Santiago.

(Xinhua News Agency July 12, 2007)