Malaysian shares ended nearly one percent down on Tuesday, mirroring regional weakness, due to investor caution ahead of a decision on US interest rates at a Federal Reserve meeting next week.
The key Composite Index gave up 0.86 percent to 818.47 points, off an intraday low of 817.55.
Overall volume was a light 248 million shares worth 584 million ringgit ($154 million), with three losers for each gainer.
"Sentiment is likely to remain weak until the Fed meeting though interest in select blue chips could lend support to the index," said an institutional dealer with a local brokerage.
The market widely expects the Fed to start a tightening cycle by raising interest rates by one-quarter of a percentage point in a bid to curb inflation.
In the Malaysian market, state-controlled Telekom Malaysia, the country's top fixed-line provider and number two mobile-phone network operator, fell 1.9 percent to 10.40 ringgit, giving back two-thirds of Monday's gain and shaving 1.3 points off the main index.
Telekom last week announced the sale of half of its 12 percent stake in South Africa's Telkom for $368 million. The sale would reap the Malaysian firm an exceptional gain of 640 million ringgit, allowing it to cut debt and expand in areas closer to home, it said.
Berjaya Sports Toto, Malaysia's second largest lottery firm, took another beating, falling 6.6 percent to 3.70 ringgit on the market's heaviest volume of 26 million shares.
The stock lost as much as 10 percent of its market value on Monday after writing off a 160 million ringgit loss at one of its units.
The provision pushed Toto into a fourth-quarter loss and dragged full-year earnings down by more than 50 percent. The firm last week reported full-year net profit of 134 million ringgit, versus market expectations of about 318 million ringgit.
Builders Gamuda and MMC Corp gained on news the government would soon announce details of development projects to be implemented over the next 18 months.
Prime Minister Abdullah Ahmad Badawi was quoted by the New Straits Times newspaper as saying that the government had a budget of 49.4 billion ringgit to spend on development projects until end-2005. He said economics minister Mustapa Mohamed would present a working paper on the projects identified at Wednesday's weekly cabinet meeting.
Gamuda, Malaysia's largest construction firm, rose 1.8 percent to 5.60 ringgit while MMC gained 1.0 percent to 2.00 ringgit.