MANILA, Oct 07, 2009 (Xinhua via COMTEX) -- The Philippine market touched its highest level in more than a year on Wednesday after the U.S. markets advanced for the second day on Tuesday.

The bellwether Philippine Stock Exchange index edged higher by another 2.86 percent or 82.60 points to 2,967.06, while the all share index climbed by 2.12 percent or 38.62 points to 1,857.51. The composite index's rally was the highest since April 2008 when it touched 2,981.12.

Trading value was likewise above average where some 1.84 billion shares valued at 5.32 billion pesos (114 million U.S. dollars) changed hands. Foreign investors were net buyers at 551 million pesos (11.84 million U.S. dollars) which explains partly the unusually strong surge of the local market.

All six subindices likewise closed higher, led by the service sector which went up by 3.46 percent or 51.38 points to 1,535.59.

A total of 87 stocks gained while 20 shares lost their value and 47 shares were unchanged.

Jun Calaycay of local brokerage Accord Capital Equities Corp. said the most obvious reason for the local market's upsurge was the U.S. market's extended strong rally on Tuesday. The Philippines' within expectation September inflation of 0.7 percent was also a sentiment booster.

"Overall, the recent string of economic data simply proves that our economy is strong. The figure lend confidence to investors who feel that some of the companies valuations are already low," Calaycay said.

He added that the local market historically has a strong fourth quarter but this year's rally only started on Tuesday after concerns over the impact of the storms "Ondoy" (international code name: "Ketsana") and "Pepeng" (international code name: "Parma") have already subsided. Thus, Calaycay said, investors decided to come back.

Calaycay added that from the looks of today's performance, there is a good chance that the local market will be able to sustain its rally although there will intermittent profit taking for those who feel that its still safer to book their gains.

The analyst said this kind of attitude is still considered understandable since the road to full recovery remains "rocky."

"But the good news is that the market is already developing an upside bias. Year to date, the market has already retrieved more than half of its value which sends a strong signal from the equities that the problems are already over," he said.

Calaycay said the play right now is to look for individual companies whose fundamentals, though are uncertain, still promises a good return.

"Let us just hope that investors will not have excessive exuberance otherwise there might be a selling pressing again. Investors are advised to always keep their feet on the ground and take the appropriate actions when they see a wide divergence from the companies' valuations," he said.

The U.S. markets were up. The Dow Jones industrial index rose by 1.37 percent or 131.50 points to 9,731.25, along with the Standard and Poor's index and tech-heavy Nasdaq composite index. Stocks in the 30-company index closed higher.

Wednesday's most active stock Pangilinan-led Metro Pacific Investments Corp.--the local unit of Hong Kong-based First Pacific Co. Ltd.--rallied by 7.57 percent to close at 3.55 pesos (0.07 U.S. dollar) apiece. The strong rally came after announcing on Tuesday that is has already acquired a 14.7 percent stake in Manila Electric Co. which is the country's largest power distributor.

Other companies also moved higher. Heavyweight Philippine Long Distance Telephone Corp. continued to climb by another 3.89 percent to settle at 2,665 pesos (57.27 U.S. dollars)--its highest for the year.

<<XINHUA NEWS AGENCY -- 10/08/2009>>