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Index dips as market continues pre-holiday consolidation

MANILA, Philippines - Local share prices declined in thin trading yesterday as market continued its pre-holiday consolidation.

The main-share Philippine Stock Exchange index shed 16.16 points, or 0.38 percent, to finish at 4,276.34. Total value turnover hit 1.57 billion shares worth P3.64 billion. Decliners outnumbered gainers, 94 to 63 while 43 stocks remained unchanged.

The day’s decline was led by the holding firms and property counters, which respectively dipped by 1.2 percent and 0.93 percent.

Trading started in positive territory, taking cue from the strong rally on Wall Street on Friday, but ended in the red as investors lacked incentive to go into the market in a big way.

Meanwhile, most Asian stocks climbed yesterday as investors cheered a new European fiscal pact aimed at fixing the region’s debt crisis and preventing a breakup of the euro currency bloc.

Signs of approval for the deal reached in Brussels on Friday could be seen across Asian stock markets: Japan’s Nikkei 225 index jumped 1.7 percent to 8,653.82. South Korea’s Kospi added 1 percent to 1,893.05. Benchmarks in Singapore, Taiwan and Indonesia also rose.

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Under the deal, all 17 countries that use the euro agreed to allow a central European authority to oversee their future budgets and impose tighter controls on spending. They also agreed to automatic penalties if countries spend too much.

Europe’s new “fiscal compact” also calls for the launch of a permanent bailout fund for euro nations in 2012 – a year ahead of schedule – and an additional 200 billion euros ($267 billion) to the International Monetary Fund for a separate emergency fund for countries in crisis.

But some analysts wondered where debt-stricken Europe, which many economists say is hurtling toward recession, will find the money to make good on the pledges.

Analysts at Credit Agricole CIB said “the lack of ECB action in terms of stepping up to the plate as lender of the last resort” still weighed on investment sentiment.

There were also doubts about the willingness of each individual country to ratify the agreement.                                                    

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