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AFTER trading in positive territory for most of yesterday, the local market suffered a sharp reversal in the last half-hour to close in the red.
Dealers say profit-taking after a hefty run-up and weak indications from bourses abroad were key factors that kept a lid on gains during the day.
The benchmark Straits Times Index (STI) had risen to as high as 2,485.12 but ended 3.5 points, or 0.14 per cent, lower at 2,450.83 after European markets opened in the red and United States stock futures pointed to early losses on Wall Street.
On Tuesday, US markets extended gains on the back of solid results from companies including Apple, Caterpillar and phone maker LG Electronics.
But the mood was partly dampened by worries about consumer confidence and the speed of recovery after Federal Reserve chairman Ben Bernanke cautioned that US unemployment was likely to remain high into 2011.
In Asia, the Shanghai Composite Index was the region's best performer, adding 2.6 per cent to a 13-month high, helped by a jump in oil and coal shares such as Sinopec.
Gains in Tokyo, Taiwan and South Korea were more moderate at less than 1 per cent, while Hong Kong's Hang Seng Index fell 1.3 per cent.
Local market participation shrank, with 1.89 billion shares worth $1.71 billion changing hands.
City Developments led declines as investors pocketed gains after a six-day, 21 per cent rally. The stock lost 34 cents, or 3.46 per cent, to $9.49.
Palm oil giant Wilmar International rose for the seventh straight day to its highest level since Jan 10 last year. The stock added four cents, or 0.72 per cent, to $5.62. UBS upgraded the stock to 'buy' from 'neutral', on the back of an unexpectedly strong demand for vegetable oil in the first half of the year.
Fragrance Group surged to its highest level since February last year. It rose 2.5 cents, or 5.43 per cent, to 48.5 cents after reporting an 11.4 per cent rise in second-quarter net profit to $17.7 million.
The group said it planned to launch at least another six residential projects later this year.
Companies which were scheduled to report earnings after the market close also rose on optimism of better profits.
Keppel Land rose to its highest level in more than a month, adding five cents, or 2.01 per cent, to $2.54. Osim added three cents, or 6.25 per cent, to 51 cents.
Optimism about better-than-expected quarterly earnings and positive guidance on the second half should continue to underpin the stock market, said DBS Vickers, adding that strength in property stocks, which has lifted the stock market in the past two weeks, will have positive spillover effects.
'Interest should spill into other growth sectors, such as technology, given that major US tech bellwethers have generally posted better quarterly earnings and forward guidance,' said DBS Vickers.
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