The benchmark 30-company Philippine Stock Exchange Index dropped 2.07 points, or 0.07 percent, at 3,039.31, adding to Monday’s 0.7 percent loss.
"This is a market where most institutional investors are on the sidelines," said AB Capital Securities Research Director Jose Vistan.
He said cautious investors wanted to see the prices stabilize before returning to the market.
Top-traded Philippine Long Distance Telephone Co. advanced 0.44 percent at P2,295, (PLDT) tracking the 1.05-percent advance by the company’s American depository receipts in New York overnight.
Advancers led decliners 59 to 35, while 64 stocks were unchanged.
"The rise in the yields of government securities is inevitable,’’ said James Lago, head of research at Westlink Global Equities in Manila. "Interest rates are going to crawl up.’’
Manila Electric Co. (Meralco) advanced after the company said it will contest an assessment by the tax agency that it can’t use overpayments in 1999 to reduce its tax liabilities in 2002.
The yield of the 91-day Treasury bill, which banks use to price loans, climbed to 2.998 percent from 2.935 percent in a government auction Monday. The yield for the 182-day notes increased to 3.462 percent from 3.395 percent.
"Some investors are pocketing the profit they made in equities,’’ Lago said. "These funds could end up in fixed-income assets.’’
Globe Telecom, the country’s second-biggest mobile phone operator, fell P50, or 3.7 percent, to P1,295, trimming this year’s gain to 4.9 percent. Holcim Philippines, the country’s largest cement producer, tumbled 30 centavos, or 3.4 percent, to P8.50, shaving this year’s advance to nine percent.
Separately, Manila Electric’s Class A shares, which are reserved for Filipinos, advanced P1.50, or 2.2 percent, to P68.50. Its Class B shares, which have no ownership restrictions, rose P1, or 1.5 percent, to P68.50.  AP