SE Asia Stocks-Surge on U.S. rate cut, Singapore at 2-mth high

By Koh Gui Qing SINGAPORE, Sept 19 (Reuters) - Southeast Asian stocks surged on Wednesday, with Singapore shares posting their best one-day gain in a month, as a bold U.S. interest rate cut powered blue chips such as the region's top telecom SingTel and lender DBS.
Investors said the U.S. Federal Reserve interest rate cut overnight by half a percentage point to 4.75 percent allayed their fears about a sharp slowdown in the U.S. economy, Asia's largest export market.
"It's really a relief that the U.S. Fed is focusing on the economy rather than inflation," said Khiem Do, who manages more than $400 million at Baring Asset Management in Hong Kong.
"At least the fear of a U.S. recession has diminished for now," he said.
Investors expect the lower U.S. interest rates to prompt Asian central banks to cut rates as well. Central banks in the Philippines and Indonesia said on Wednesday there was room for more rate cuts. [ID:nSP65482] [ID:nJAK95365] Singapore's key Straits Times Index <.STI> jumped 3.4 percent -- its biggest one-day rise in percentage terms since Aug. 20 -- to a 2-month high. As of Wednesday's close, the index is 2.6 percent below its record high of 3,688.58 points hit on July 16.
Elsewhere, the Indonesian stock index <.JKSE> jumped 3.3 percent to its highest level since Aug. 1, Malaysian shares <.KLSE> added 1.6 percent, and Thai shares <.SETI> were up 1.2 percent by 0937 GMT. The Philippines' key index <.PSI> climbed 2.2 percent, and the Vietnam stock market <.VNI> rose 1.2 percent.
In Singapore, blue-chip stocks led gains. Singapore Telecommunications (SingTel) , Southeast Asia's largest telecom, jumped 4.2 percent to S$3.98, a level last seen in June 1996. Keppel Corp , the world's top rig builder, climbed 4.5 percent.
Oil prices climbed over $82 a barrel on Wednesday, near a record reached a day earlier. [ID:nSP99232] Shares in property developers and banks -- which stand to benefit from lower interest rates thanks to stronger demand for real estate and loans -- rose too.
Southeast Asia's top two property developers CapitaLand and City Developments jumped 3.8 percent and 4.6 percent, respectively.
DBS Group , Southeast Asia's largest lender, added 4.2 percent, United Overseas Bank , Singapore's second-biggest lender, climbed 3.9 percent, and Oversea-Chinese Banking Corp rose 3.5 percent.
Lorraine Tan, regional strategist at Standard & Poor's, said while investors should expect more financial institutions to fall victim to the U.S. subprime mortgage crisis, she overweights banking stocks in Singapore, Malaysia and Hong Kong.
This is because the subprime fallout would have limited impact on their earnings, she said.
"There should still be some bad news coming up, but whenever there is a dip in Asia, we see it as a buying opportunity," Tan said.
In Malaysia, the largest lender Malayan Banking Bhd rose 1.8 percent. Bumiputra-Commerce Holdings , the second-biggest bank, added 1.9 percent, while Public Bank Bhd , the No. 3 bank, climbed 1.6 percent.
In Jakarta, PT Bank Mandiri Tbk , the largest lender, leapt 6.3 percent, and PT Bank Central Asia Tbk , the second-biggest lender, added 3.4 percent.

<-------- Will this continue tomorrow?