SE Asia Stocks-Singapore erases gains to close slightly higher, Philippines extends falls

By Devika Syamnath

Sept 26 (Reuters) - Singapore shares gave up most of their

early gains on Wednesday after data showed factory output growth

in August slowed more than expected, while Philippine stocks

weakened for a second straight session ahead of an expected rate

hike on Thursday.

Investors were also cautious as they weighed how much more

policy tightening is in store from the U.S. Federal Reserve. Fed

funds rates futures implied traders are fully pricing in a rate

hike on Wednesday, plus an 85 percent chance of another rise in

December.

"Asia equity markets had traded defensively in the afternoon

session giving back early morning gains... with an FOMC (Federal

Open Market Committee) main event on tap tonight, position

squaring is dominating market sentiment," Stephen Innes, APAC

head of trading at OANDA, said in a note.

Singapore's FTSE Straits Times Index climbed 0.9

percent in intraday trade, before erasing most of the gains to

close 0.1 percent higher, marking its sixth consecutive session

of gains.

Manufacturing output in August rose 3.3 percent from a year

earlier, data from the Singapore Economic Development Board

showed, slower than the revised 6.7 percent growth in July. The

median forecast in a Reuters survey predicted a 4.4 percent

expansion.

Industrial stocks were the top gainers with Jardine Matheson

gaining 1.1 percent, while Oversea-Chinese Banking

Corp was the biggest drag with a drop of 0.5 percent.

Among other markets that gained, Thai stocks snapped

two consecutive sessions of falls, helped by energy and real

estate stocks. PTT PCL rose 0.5 percent to its highest

close in over 4 months and was among the top boosts.

Meanwhile, Philippine stocks closed 0.9 percent

lower, making them the top losers in the region.

The selloff was due to a number of factors, including

expectations of higher inflation, expected rate hike by the

central bank, and macroeconomic factors such as the impact of

the trade war and higher oil prices, said Rachelle C. Cruz, an

analyst with Manila-based AP Securities.

The central bank is widely expected to raise its key

interest rate by another 50 basis points on Thursday, in a bid

to tamp down inflationary pressures, which have been steadily

rising since January due to higher taxes, a weak peso, and

rising food and fuel costs.

The Philippines' finance minister said on Tuesday the main

concern for him was the recent rise in oil prices.

Cruz echoed the view, saying the recent rally in oil prices

added to pressure on the Philippines which is a net importer of

crude.

Indonesian shares reversed their course to close

slightly lower, with losses in energy counters outweighing gains

in financials.

United Tractors Tbk PT declined 3.2 percent, while

Bank Central Asia Tbk PT rose 1.2 percent.

"Indonesia's central bank begins their two-day-long policy

meeting today with our expectation that the benchmark rate will

be increased by 50 bps," OCBC said in a note to clients.

For Asian Companies click;

SOUTHEAST ASIAN STOCK MARKETS

Change on day

Market Current Previous Close Pct Move

Singapore 3239.1 3236.08 0.09

Bangkok 1749.93 1747.99 0.11

Manila 7268.21 7332.17 -0.87

Jakarta 5873.271 5874.299 -0.02

Kuala Lumpur 1798.72 1794.47 0.24

Ho Chi Minh 1009.61 1010.74 -0.11

Change on year

Market Current End 2017 Pct Move

Singapore 3239.1 3402.92 -4.81

Bangkok 1749.93 1753.71 -0.22

Manila 7268.21 8558.42 -15.08

Jakarta 5873.271 6355.654 -7.59

Kuala Lumpur 1798.72 1796.81 0.11

Ho Chi Minh 1009.61 984.24 2.58

(Reporting by Devika Syamnath in Bengaluru; Editing by

Subhranshu Sahu)