Singapore's key share index ended at a fresh 34-month high on Monday driven by investor appetite for blue chips such as DBS Group Holdings and Singapore Airlines
Market sentiment was firm despite data showing Singapore's factory production had fallen for a second straight month after adjusting for seasonal patterns, shrinking 7.1 percent in December, dragged down by the volatile drug manufacturing sector.
Dealers said investors were looking beyond the December data to an expected improvement in the economy this year.
The key Straits Times index, which had repeatedly crossed the 1,900 mark during trading hours, ended 0.55 percent, or 10.42 points, higher at 1,899.98 on Monday - its highest closing level since March 8, 2001. The STI has risen 7.7 percent since the start of the year.
DBS Group, Southeast Asia's largest bank, rose 0.63 percent to S$15.90 after the Thai cabinet approved plans for a possible merger of three banks including its unit DBS Thai Danu Bank PCL to create the country's fifth-biggest bank with assets of about $17.2 billion.
Dealers said the news was seen as positive as this could lead to DBS gaining a greater exposure to the Thai banking market.
Singapore Airlines Ltd, Asia's largest airline by market value, was up 0.89 percent at S$11.30 on fund-buying after some analysts re-rated the stock on a brighter outlook for the sector this year as passenger traffic was expected to improve with the economic recovery, dealers said.
Venture Corp also gained 2.59 percent to S$23.80 lifted by key customer Hewlett-Packard upbeat comments on global outsourcing revenues as customers turned optimistic.
But concern over the spread of the contagious bird flu hurt shares of Singapore's Cerebos Pacific, which slumped 2.29 percent to S$3.42. The food company's flagship products include Brand's Essence of Chicken.
The broader market was slightly weak with losers leading gainers 209 to 147 on a turnover of 1.18 billion shares.
Among top actives was Neptune Orient Lines, the world's sixth-largest container shipping group. The stock climbed 4.8 percent to S$2.39 on a brisk turnover of 51.6 million shares. Dealers said there was a married deal of 38 million shares crossed at S$2.24 each.