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file photo - A plume of smoke above Mount Agung volcano is illuminated at sunset as seen from Amed, Karangasem Regency, Bali, Indonesia, November 30. REUTERS/Darren Whiteside


JAKARTA (Reuters) - Indonesia shrank the exclusion zone around a grumbling volcano on the resort island of Bali on Thursday after fears of an imminent eruption, allowing farmers to return to their homes.

The 3,000-metre Mount Agung remains on alert for a major eruption, but officials said the danger zone around the crater would be reduced to a six-km (four-mile) radius from 10 km.

"Mount Agung remains in an eruption phase and could affect settlements. All parties are urged to remain cautious," Agung Pribadi, press relations officer at the natural resources ministry, said in a statement.

The volcano has been spewing lava and ash since late November, when authorities raised the alert status to the highest.

Bali airport was closed for three days, leaving thousands of tourists stranded and prompting others to cancel their year-end holiday plans.

(Reporting by Wilda Asmarini; Writing by Kanupriya Kapoor; Editing by Nick Macfie)

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