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Malaysia Stock Market May Extend Losses

The Malaysia stock market has finished lower in two of three trading days since the end of the four-day winning streak in which it had risen almost 25 points or 1.5 percent. The Kuala Lumpur Composite Index finished just below the 1,585-point plateau, and now traders are expecting additional selling pressure when the market opens on Thursday.

The global forecast for the Asian markets remains negative as reports suggest that the debt problems in Europe are growing worse. Greece is facing a political impasse after voters turned down the parties that accepted the international bailout terms. Also, Spanish banks were pummeled after borrowing costs spiked higher for Madrid. The European markets finished mostly lower and the U.S. bourses were firmly in the red - and the Asian markets also figure to track to the downside.

The KLCI finished slightly lower on Wednesday following losses from the financial shares and plantation stocks.

For the day, the index eased 5.70 points or 0.36 percent to finish at the daily low of 1,584.90 after peaking at 1,591.03. Volume was 1.28 billion shares worth 1.41 billion ringgit. There were 450 decliners and 273 gainers, with 313 stocks finishing unchanged.

Among the actives, IOI Corporation, Maybank, Genting Malaysia and British American Tobacco all finished lower, while Naim Indah was unchanged and YTL, Public Bank and CIMB Group all ended higher.

The lead from Wall Street suggests consolidation as stocks moved lower on Wednesday, although they moved off of session lows later in the day. The early sell-off came as traders continued to express concerns about the recent elections in France and Greece and their potential impact on efforts to address the European debt crisis.

Investors kept a close eye on the political situation in Greece, where leftist leader Alexis Tsipras attempted to form a coalition government. Tsipras is opposed to the terms of the bailout by the European Union and the International Monetary Fund - although his efforts have been unsuccessful, however, with the debt-plagued nation potentially headed to a new round of elections in June.

Further selling pressure was generated by reports that Eurozone countries were debating a potential delay in a 5.2 billion euro bailout payment to Greece due to the ongoing political uncertainty. But subsequent reports contradicted the news from the Journal and helped the markets to recover, and the European Financial Stability Facility's Board of Directors later confirmed the payment.

In corporate news, shares of Disney (DIS) rose by 1.6 percent after the entertainment giant reported better than expected second quarter results, benefiting from strong performances by its media networks and theme parks.

The major averages ended the day firmly in negative territory, although well off their worst levels of the day. The Dow dropped 97.03 points or 0.8 percent to finish at 12,835.06, while the NASDAQ fell 11.56 points or 0.4 percent to end at 2,934.71, and the S&P 500 slid 9.14 points or 0.7 percent to 1,354.58.

On the economic front, Malaysia's exports fell 0.1 percent on year to MYR 61.79 billion in March, the Department of Statistics said on Wednesday, missing forecasts for a 3 percent gain. Total imports grew 1.6 percent annually to MYR 51.33 billion.

Compared to February, exports rose 8.7 percent. Imports were 10.9 percent higher than the previous month.

The trade surplus fell to MYR 10.45 billion from February's MYR 10.58 billion. Economists expected a drop to MYR 10 billion. The surplus a year ago was MYR 11.3 billion.

During the first quarter of 2012, exports grew 4.4 percent compared to the preceding quarter, while imports expanded by 6.9 percent. A trade surplus of MYR 29.78 billion was recorded in the first quarter of the year.

by RTTNews Staff Writer

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