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Malaysia Stock Market May Add To Record High

The Malaysia stock market has finished higher now in three straight sessions, climbing more than 20 points or 1.4 percent en route to a record closing high. The Kuala Lumpur Composite Index finished just above the 1,600 point plateau, and now analysts are forecasting continued support at the opening of trade on Tuesday.

The global forecast for the Asian markets calls for modest upside following sound economic data from the United States, although soft data from Europe may limit the upside. Steel companies are expected to provide support, along with gold and technology stocks - although properties may weigh. The European and U.S. markets finished firmly higher, and the Asian bourses are expected to open in similar fashion.

The KLCI finished modestly higher on Monday following gains from the financial shares, industrial issues and plantation stocks.

For the day, the index gathered 7.45 points or 0.47 percent to finish at 1,603.78 after trading between 1,590.27 and 1,603.96. Volume was 1.44 billion shares worth 1.4 billion ringgit. There were 400 gainers and 353 decliners, with 324 stocks finishing unchanged.

Among the actives, Maybank, Sime Darby and CIMB Group, while Carotech and Ingenuity were unchanged and Petronas Chemicals, Metronic Global and Ariantec Global all ended lower.

The lead from Wall Street is upbeat as traders reacted positively to the latest U.S. manufacturing data, prompting a rebound in the afternoon following a weak start in the morning.

The turnaround was spurred by the Institute for Supply Management, which reported a bigger than expected increase in its manufacturing index - which climbed to 53.4 in March from 52.4 in February, with a reading above 50 indicating growth in the sector. Economists had expected a reading of 53.0. Meanwhile, the Commerce Department reported an unexpected drop in U.S. construction spending in February.

The early weakness followed disappointing European economic data, with Markit Economics reporting a continued contraction in Eurozone manufacturing activity. The purchasing managers' index fell to 47.7 in March from 49.0 in February - in line with a preliminary reading. A separate report showed that the Eurozone unemployment rate rose to a record high of 10.8 percent in February.

Among individual stocks, Avon Products (AVP) surged 17.3 percent after the beauty products company rejected an unsolicited takeover offer from Coty Inc. The offer valued Avon at $23.25 per share, a 20 percent premium to its closing price on Friday.

Meanwhile, shares of Groupon (GRPN) tumbled by 16.9 percent after the company announced a downward revision to its fourth quarter results due to an increase to its refund reserve accrual.

The major U.S. averages were higher on Monday as the Dow rose 52.45 points or 0.4 percent to finish at 13,264.49, while the NASDAQ advanced 28.13 points or 0.9 percent to 3,119.70 and the S&P 500 climbed 10.43 points or 0.7 percent to 1,418.90.

In corporate news, Royal Bank of Scotland Group on Monday said it has agreed to sell certain businesses in Asia Pacific to Malaysia's CIMB Group. The cash consideration, based on net asset values, is expected to be about 75 million pounds.

RBS would sell to CIMB its Cash Equities businesses in Australia, China, Hong Kong, India and Taiwan; including the cash equities sales desks in the US and UK and Equity Capital Markets and Mergers & Acquisition businesses in Australia and China, Hong Kong, India, Indonesia, Malaysia, Singapore, Taiwan and Thailand.

The principal benefit to RBS of the sale is to mitigate partially the shutdown costs otherwise associated with these businesses. The transaction will complete by jurisdiction with the final completion expected to occur during the fourth quarter of 2012.

by RTT Staff Writer

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