MANILA (AFP) - Philippine share prices soared 9.8 percent higher Tuesday in the biggest single-day gain in seven years, as investors played catch up with global bourses after a holiday break, dealers said.
Players were encouraged to chase bargains after Wall Street and other markets rallied in the wake of the Federal Reserve's surprise 50 basis points cut in its discount rate on Friday, they said.
The rate cut, and a further Fed injection of funds into the US banking system on Monday helped allay, for the moment, fears of tighter credit that battered markets over the past week.
The composite index added 283.18 points to 3,167.52, after touching an intraday high of 3,171.16. A total of 4.6 billion shares worth 5.6 billion pesos (119.84 million dollars) were traded.
The broader all-share index ended up 150.94 points to 2,016.16. Out of 156 stocks traded, 135 advanced, eight declined, and 13 were unchanged.
It was the index's biggest one-day gain since January 22, 2001 when Gloria Arroyo was installed as president. The market was closed Monday for a public holiday.
"The Fed's decision to cut its discount rate reversed the negative sentiment that had been prevailing in global markets," said Jose Vistan of AB Capital Securities.
He said the move achieved its purpose of soothing investor fears of a credit crunch.
"That measure sent a strong signal to investors that the Fed would act if necessary to stabilise the markets.
"It took out the element of irrational fear that has gripped investors in recent weeks," Vistan added.
Ron Rodrigo of Unicapital Securities, however, said concerns about fallout from the subprime mortgage troubles are likely to linger, making markets volatile and prone to quick profit taking on any upside.
"We are not completely out of the woods. Investors will be wanting to see if key central banks will continue intervening if needed to bring stability to the market."
Many key central banks around the world, including the Fed, have been injecting funds into money markets over the past week and a half, in a bid to keep their overnight rates close to target and to dampen fears about tighter credit.
"The damage due to the big sell-offs in previous weeks is still there. There will be some selling on rallies and this will cap gains (going forward)," Vistan said.
The day's biggest gainer was market leader Philippine Long Distance Telephone up 225 pesos to 2,520.
Ayala Corp rose 62.50 to 465.
SM Prime Holdings advanced 1.35 to 10.75.
San Miguel A added 2.50 to 61.50 while San Miguel B rose 3.50 to 63.50.