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Singapore stocks extend gains as DBS hits 17-year high; Malaysia shares little changed

SINGAPORE (Nikkei Markets) -- Singapore shares rose for the fourth straight day on Tuesday after optimism over earnings drove heavyweight DBS Group Holdings to the highest level since 2000. Malaysia shares were little changed as regional markets took a breather after a recent rally.

U.S. markets ended little changed overnight following last week's record highs as investors awaited a slew of earnings. Asian and U.S. stocks have seen strong gains in recent sessions after dovish comments from Federal Reserve Chair Janet Yellen and lower-than-expected inflation pushed back expectations of additional rate hikes in the world's largest economy. The Nikkei Asia300 index was little changed on Tuesday following a six-day rally.

"Subdued overnight movements provided Asian markets little to draw from on the second trading day of the week," said Jingyi Pan, a market strategist at Melbourne-based brokerage IG. "The attention shifts away from the monetary policy amid a lack of leads as U.S. markets look towards earnings."

The Singapore dollar and the Malaysian ringgit rose Tuesday as dwindling bets over the Fed.'s next interest rate increase weighed on the U.S. currency. The dollar index slumped to a 10-month low.

Singapore's FTSE Straits Times Index rose 0.2% to 3,306.08. DBS added 1.7%. Investors are betting on another strong set of earnings from Singapore's largest lender amid an improving economic outlook, continued expansion in its wealth management business, and less concerns over exposure to oil and gas industry. The bank reports earnings for the June quarter on August 4.

Singapore Technologies Engineering added 1.1%. Its subsidiary VT Robotics entered into a definitive agreement with Vision Technologies Land Systems to acquire a 100% stake in U.S.-based Aethon by way of a merger.

Singapore Press Holdings fell 2.6%, extending losses from Monday after it reported a worse-than-expected 45% decline in third-quarter net profit.

Singapore Airlines edged higher by 0.1% to S$10.1. The carrier reported a load factor of 82.7% for June, up 4.6% from last year. Total number of passengers carried rose 8.7%.

"Despite strong operating momentum, we anticipate that sustained yield pressure will limit revenue upside. Also, higher ex-fuel costs from salaries, ownership charges, and maintenance should put pressure on margins," Morgan Stanley said in a note, reiterating "underweight" rating on the stock with a target price of S$8.92.

The FTSE Bursa Malaysia KLCI ended little changed at 1,754.92. DiGi.Com rose for the second day, adding 0.9%, as the telecom operator continued to recover from losses suffered last week after earnings disappointment. YTL Corp. was the top loser with a fall of 1.4%.

Iskandar Waterfront City jumps 24% to 1.54 ringgit on speculation its parent company, Iskandar Waterfront Holdings, may be back in contention for the aborted Bandar Malaysia project. The speculation comes as China's Dalian Wanda Group, which was reportedly interested in the project, faces restrictions on offshore acquisitions.

AirAsia advanced 4.1% to 3.28 ringgit after CIMB Investment Bank raised the airline to "add" from "hold" following a 14% decline from recent peak. It kept the target price at 3.51 ringgit.

"On a year-on-year basis, we believe that AirAsia may deliver better results in 2Q17 despite the ringgit being weaker by 5.7% year-on-year and the jet fuel price (inclusive of hedging) higher by 11% year-on-year," CIMB said, adding that it expects loads to be four percentage points higher on-year, offsetting most or all of the cost increases.

Boon Koon Group jumps 20% to 0.545 ringgit after its new chairman raised stake in the manufacturer of rebuilt commercial vehicles to 28.5% from 24.2% earlier.

Ibraco rose 3.4% to 0.91 ringgit after the real estate developer secured a contract worth 302.64 million ringgit ($70.7 million) from the Public Works Department for construction of a new airport at Mukah, Sarawak.

"Assuming an operating margin of 7.0%, we estimate the contract to enhance the group's net earnings by 13.8 million ringgit, or 0.028 ringgit per share, throughout the construction period. We raise our FY17-19 earnings forecasts by 6 to 10% assuming the contract commences in Sep. 17," TA Securities said in a note, raising the rating to "Buy" and increasing the target price to 1 ringgit.

Ikhmas Jaya fell 2.1% to 0.675 ringgit after the construction engineering company said it planned to raise up to 33.80 million ringgit via a 10% private placement based on an indicative issue price of 0.65 ringgit each.

Wellcall Holdings added 2.3% after the manufacturer of industrial rubber hose proposed a 3-for-2 share split to boost stock liquidity.

--Nimesh Vora and Kevin Lim

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