Philippines share prices closed 0.1 percent lower on Tuesday as cautious investors refrained from taking positions ahead of the US Federal Reserve's decision on interest rates, dealers said. The main index lost as much as 26 points in early trading before bargain-hunters stepped in, chasing market leader Philippine Long Distance Telephone (PLDT) and Ayala Corp.
The composite index finished down 3.14 points at 3,672.38. It moved between 3,649.38 and 3,683.97. The broader all-share index was up 0.9 of a point at 2,243.75. There were 57 advancers and 54 decliners with 59 ending flat. A total of 1.6 billion shares worth 3.6 billion pesos (86.8 million dollars) were traded. The Philippine peso traded at 41.46 to the dollar.
Wall Street was upbeat on Monday as expectations for a rate cut and an uptick in pending home sales helped offset concerns about another round of subprime mortgage-related losses. The Fed meets later Tuesday to decide what to do with interest rates, with financial markets having priced in a 25 basis point rate cut.
Markets were previously betting for an aggressive half-point cut in interest rates until recent positive US economic data came out. "A rate cut is a given but we may see a muted reaction if it's just 25 basis points," said Lawrence de Leon at Accord Capital Equities.
Foreign funds were also seen cutting their positions in local stocks ahead of the widely expected rate cut in the US, said Ron Rodrigo at DBP Daiwa Securities. PLDT, the nation's biggest company by market value, rose 15 pesos to 3,050.
Ayala Corp, the nation's biggest conglomerate, was up 10 at 585. San Miguel Corp's A-shares, restricted to local investors, gained 50 centavos to 50.50 pesos. Its B-shares advanced 1.50 to 51.50. San Miguel, Southeast Asia's largest food and beverage group, is expected to take part in an auction Wednesday for a 25-year franchise to operate the Philippines' power grid.
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