GEORGE TOWN, Cayman Islands (Reuters) - The embattled leader of the Cayman Islands was released on bail after a second day of questioning on Wednesday, following his arrest on suspicion of theft and corruption in the notoriously secretive offshore Caribbean financial center.

Premier McKeeva Bush, a veteran politician and head of one of the world's best-known tax havens, was detained on Tuesday at his home by members of the Financial Crime Unit of the Royal Cayman Islands Police Service.

He was freed on police bail late on Tuesday, following a full day of questioning by the authorities, but was taken back into custody for further questioning on Wednesday morning, police said.

On Wednesday afternoon, police spokeswoman Janet Dougall said in a statement that the 57-year-old premier had been "placed on police bail until early February 2013, to allow further investigations to take place both here and abroad in connection with the allegations made against him."

The statement added that "a considerable amount of property, including computer equipment" had been seized during searches stemming from the investigation of Bush, which was "still very active."

Police and other officials have declined to spell out specific details of the probe targeting Bush, saying only that it included allegations of theft, misuse of a government credit card and abuse of office over the alleged importation of explosives without valid permits. The explosives were to be used by a local firm in a large construction project.

Bush himself has not spoken in public since his arrest but his chief of staff urged Caymanians to pray for him and to keep in mind that everyone is "innocent until proven guilty."

A veteran politician, Bush has been the target of ongoing corruption probes for more than a year now. Bush's arrest on Tuesday drew pointed calls for his resignation to avoid further embarrassment to the palm-fringed financial hub, which is the offshore home for most of the world's hedge funds.

"The eyes of the world are now focused on the Cayman Islands and watching what happens here," said an editorial in the online edition of the Caymanian Compass newspaper.

'BANANA REPUBLIC'

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Cayman Islands leader freed on bail as corruption probe continues