Singapore shares weaken; US budget fight weighs

Singapore shares weaken; US budget fight weighs
Asian stocks tumbled, driving Japan's Nikkei 225 Stock Average down 11 per cent, and U.S. futures slumped on concern the deepening credit crisis will push the global economy into a recession.

Singapore stocks fell for a second straight session as investors stayed on the sidelines on uncertainty over the results of US budget talks.

The benchmark Straits Times Index dropped 0.8 percent to 3,212.87 with 82 million shares changing hands, just about 30 per cent of its 30-day average daily turnover. MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.2 percent on upbeat Chinese manufacturing data.

The Straits Times Index marched to a six-week peak of 3,260.14 last week after the US Federal Reserve surprised the market by continuing its massive monetary stimulus, but the euphoria has fizzled out as investors mulled the consequences if the Congress failed to reach an agreement to raise the debt ceiling.

"With the uncertainty that follows the deadline to raise the US debt ceiling and a likely lack lustre 3Q results season, STI's short-term rally has likely come to a stall around 3,250 last week," said DBS Vickers in a research report.

Telecommunication plays fell 1.4 percent, more than any other sector, with StarHub Ltd down 1.6 percent and Singapore Telecommunications Ltd falling 1.3 percent. Mobile services provider M1 Ltd dropped nearly 3 percent, the biggest daily drop in more than three months.

Among other stocks, Rex International Holding Ltd surged 11 percent to S$0.94 as DBS initiated coverage on the oil and gas exploration company, with a "buy" call and a target price of S$1.27.

YHM Group Ltd, controlled by Singapore-based offshore oilfield service firm Ezion Holdings Ltd, soared 12 percent to S$0.056 after the company secured a $183 million contract to provide a semi-submersible rig.

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