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Singapore stocks hit 2-year highs as banks rally; Malaysia shares advance

SINGAPORE (Nikkei Markets) -- Singapore shares rose Thursday to new two-year highs, led by banking stocks after Oversea-Chinese Banking Corp. reported better-than-expected earnings.

Malaysia shares also advanced, joining an Asian equity rally, as U.S. bond yields and the dollar fell after the Federal Reserve's monetary policy decision overnight.

The Nikkei Asia300 Index of companies outside Japan climbed 0.3% after the Fed's statement reinforced bets that low inflation may keep the central banks from raising rates further this year. The authority had left interest rates unchanged as expected, stressing that inflation was running below its 2% target. As for the balance sheet normalization, the central bank said it will begin the process "relatively soon." According to the CME FedWatch Tool, odds of a Fed rate hike in December edged lower. U.S. borrowing costs fell overnight and the dollar index declined to a one-year low on Thursday.

"Market expectations of a start to balance sheet reduction in September remain intact, while opinions on the prospect of a December hike continue to be mixed," Lee Ferridge, the head of multi-asset strategy for North America at State Street Global Markets, wrote in a note. "The Fed is sticking to its plan for the gradual reduction of accommodation, but it will need a pick-up in U.S. data to convince the market that 2017 will see a third rate hike."

Singapore's FTSE Straits Times Index rose 0.5% to 3,354.71. OCBC advanced 2.1% after reporting a forecast-beating 22% jump in net profit for the June quarter, helped by higher loan disbursals and increased income from its wealth management business. United Overseas Bank, due to report earnings on Friday, added 1.3%. DBS Group Holdings climbed 1.6%.

Sia Engineering extended losses from Wednesday following disappointing earnings, slipping 3% to a three-month low.

Noble Group plunged 31% after the commodity trader said it expects a loss in the second quarter, flagging industrywide challenges.

Singapore Exchange slipped 0.3% and Singapore Airlines edged higher by 0.2% ahead of earnings. After the markets closed, SGX reported a 11% rise in June quarter net profit.

The FTSE Bursa Malaysia KLCI advanced 0.2% to 1,770.07. CIMB Group Holdings added 3%, the day's top performer, while Astro Malaysia Holdings chalked the biggest decline with a 2% fall.

Heavyweight Tenaga Nasional rose 0.1% ahead of its earnings. The company reported a 15% decline in net profit for the third-quarter after trading hours.

Stock exchange operator Bursa Malaysia extended Wednesday's rally following upbeat earnings, rising 1% to 10.60 ringgit.

TA Securities upgraded the stock to "hold" and raised its target price to 11.10 ringgit. "We foresee market activities to remain buoyant, supported by more sanguine global and domestic economic conditions and expectations that the general election is just around the corner," the brokerage said in a note.

Pantech Group, a pipes, valves and fittings maker, advanced 3.1% after reporting a 72% rise in first-quarter net profit.

Mieco Chipboard, engaged in the manufacturing and sales of wood-based products, advanced 2.7%. Late Wednesday, the company said second-quarter net profit surged more than 16 times. Also, it said it plans to buy fibre board producer Great Platform in a deal worth 58.59 million ringgit ($13.67 million).

--Nimesh Vora and Kevin Lim

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