Shares is higher on banks, commodities; 2,810 cap seen

Singapore shares climbed 1.28% by early Friday afternoon, in line with gains in other Asian bourses, as a coordinated effort by major central banks around the world helped ease fears about a credit freeze in Europe.

 

The European central bank on Thursday announced plans, along with other major central banks, to make it easier for euro zone institutions to borrow dollars.

 

Commodity-related companies such as Olam International (OLAM.SI) outperformed the broader index as investors covered some short positions on stronger oil prices and as positive news out of Europe helped lift the global economic outlook.

 

At 1:00 p.m., the Straits Times Index (STI) <.FTSTI> was up 1.28%, or 35.27 points, at 2,801.22. The total volume of shares traded by then was 711 million shares worth $799.6 million.

 

This compares with the volume of 656 million shares and turnover of $650 million by the same time on Thursday. Local traders said they expect the STI to trade in a 2,790-2,810 band for the rest of the session.

 

“The inflow of fresh cash into the seemingly bare European bank coffers has led to a very strong positive reaction in the markets today,” said Jason Hughes, head of premium client management at IG Markets.

 

“Central banks working together to allow the inflow of U.S. dollars into the euro zone is adding onto positive news earlier about France and Germany standing firm behind Greece,” he added.

 

Olam was about 4.1% higher at $2.56 with over 9 million shares changing hands, while coal miner Sakari Resources (SAKR.SI), formerly known as Straits Asia, had risen 2.7% to $2.70 by 1 p.m. Singapore time.

 

“Given that oil prices has held up quite well, commodities have been relatively buoyant as well. Gold has broken through the US$1,800 ($2,231) psychological level, so perhaps investors are moving out of gold for the time being into other assets,” Hughes said.

 

Singapore banks were also higher, buoyed by hopes that the a credit squeeze in Europe will be avoided.

 

United Overseas Bank (UOBH.SI) was up 2.3% at $17.96, while DBS (DBSM.SI) had risen 1.8% at $12.59.