Index rises as worry about US slowdown eases

Share prices closed higher for the seventh straight session yesterday, tracking gains on Wall Street after President Bush unveiled a plan to rescue homeowners facing foreclosures, easing concerns about the US subprime mortgage crisis.

Investors also remained optimistic that the Federal Reserve will lower interest rates by at least 25 basis points next week to prevent a more dramatic weakening of the US economy.

After opening higher, the market seesawed in the final hour of trading as investors locked in some gains, but the main index still managed to finish at fresh four-week highs.

The composite index closed up 11.43 points or 0.3 percent at 3,745.39, off a high of 3,772.48.

It was the key index’s highest close since Nov. 7 when it settled at 3,788.26.

The main index rose 4.7 percent from last week. The broader all-share index gained 8.82 points or 0.4 percent to 2,273.63.

However, decliners outnumbered gainers 60 to 53, while 53 stocks were unchanged.

A total of 1.8 billion shares worth P4.8 billion changed hands.

The bailout plan announced by Bush allows some homeowners facing foreclosure to not only freeze their interest rates for up to five years, but also refinance their mortgages.

The plan was created by the Treasury Department, mortgage lenders and banks, and could help about 1.2 million US homeowners.

“That’s one positive step to sooth investor fears about the subprime mortgage crisis,” said Lawrence de Leon, an analyst at Accord Capital Equities.

“That’s one less worry for investors.” Banks and property developers paced gains, with Metropolitan Bank and Trust Co. up P2 or 3.3 percent at P62.50.

Bank of the Philippine Islands rose P1 or 1.6 percent to P65.

Property developer Megaworld Corp. advanced 10 centavos or 2.4 percent to P4.35.

Some stocks succumbed to profit-taking which was not unexpected given the market’s seven-day advance, said Rommel Macapagal, chairman of Westlink Global Equities.

“It’s a natural tendency to be cautious ahead of the weekend,” he said. Market leader Philippine Long Distance Telephone Co. retreated P5 or 0.2 percent to P3,120, giving up early gains.

Manila Electric Co. was down P1.50 or 1.7 percent at P87, snapping a six-day rise. — Technistock