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Shares rise as crude oil prices surge ahead of reported OPEC meeting

KUALA LUMPUR (NewsRise) -- Malaysian shares rose for a second session Tuesday, as crude oil prices surged ahead of a likely meeting between the world's biggest oil producers that could potentially lead to production cuts.

     The nation's benchmark FTSE Bursa Malaysia KLCI rose 0.91% to 1,664.99 points. The benchmark index has declined 1.6% in 2016.

     SapuraKencana Petroleum, UMW Holdings, Axiata Group and Genting led gains Tuesday, while Maxis, British American Tobacco Malaysia fell.

     The ringgit fell 1.04% to 4.168, tracking a strengthening dollar. The currency has advanced 2.8% since the start of the year.

     Global oil prices rose Tuesday as reports of a meeting of officials from the world's biggest oil exporters sparked expectations the producers will finally decide on output cuts.   The benchmark Brent crude contract rose as much as 6.5% to $35.55 per barrel today.

     Oversupply concerns have mounted over the last year as increased output from U.S. shale oil producers flooded an already-well supplied market. The Organization of Petroleum Exporting Countries, reluctant to surrender market share, has not agreed to production cuts even as demand has slackened.

     Brent crude oil prices have slid 46% over the last year and 77% from their peak in 2008. In 2016 alone, crude oil prices have tumbled over 10% on concerns of a China-led global slowdown. In January, prices had fallen below to $28 to its lowest level since 2003.

     Shortly after Malaysian markets closed, Qatar's Energy Minister Mohammed bin Saleh Al-Sada said Qatar, Saudi Arabia, Russia and Venezuela have agreed to freeze output at January levels if other major oil producers follow suit.

     Regional sentiment was further lifted after European Central Bank President Mario Draghi affirmed the monetary authority's willingness to ease policy further.

     Singapore's Straits Times and Philippine's PSE Composite index led the gains in other Southeast Asian markets on Tuesday, with a 1.28% and 0.77% advance. Thailand's SET index slipped 0.02%, while Indonesia's Jakarta Stock Exchange Composite gained 0.09%.

     In broader Asian markets, China's Shanghai Composite index and Hong Kong's Hang Seng rose 3.32% and 1.08%. Japan's Nikkei 225 index and South Korea's KOSPI advanced 0.2% and 1.37%.

     "Sentiment remains quite cautious over the near term outlook of the KLCI," said Pong Teng Siew, Head of Research at InterPacific Securities. "This is reflected in the futures prices which are still at discount to the cash price in spite of the current rally."

     The February futures on the benchmark index settled at 1,660 points Tuesday.

     On the KLCI, 20 of the 30 constituents ended higher, while overall advancing issues outnumbered declining ones 551 to 303.

     Foreign investors sold Malaysian shares worth 25.1 million ringgit ($6.1 million) Monday, according to BIMB Securities. Overseas investors have withdrawn 938 million ringgit from equity markets in 2016.

     Tuesday's rally in crude oil prices drove a 7.1% jump to 1.96 ringgit in SapuraKencana Petroleum's shares. Malaysia's biggest oil and gas services company trimmed its decline in 2016 to 2.97%.

     UMW Holdings rose 4.52% to 6.93 ringgit. The automaker has shed 12% in 2016 as analysts expect demand to remain subdued in the current year.

     Axiata Group advanced 3.02% to 5.8 ringgit. Malaysia's biggest mobile operator by revenue will report fourth quarter earnings tomorrow. The stock has fallen 9.5% this year, hurt government changes for spectrum allocation.

     Gaming conglomerate Genting rose 4.16% to 8.03 ringgit, recouping last week's entire 2% decline.

     CIMB Group Holdings rose for the fourth day, gaining 3.76% to 4.42 ringgit. The banking major has risen 8% in the last four sessions, trimming 2016's losses to 2.6%.

     British American Tobacco Malaysia led losses on the KLCI, slipping 0.89% to 55.9 ringgit ahead of its fourth quarter earnings on Wednesday.

     Maxis, which rose 1.5% Monday, fell 0.81% to 6.1 ringgit.

     AirAsia fell 1.47% to 1.34 ringgit. Asia's biggest budget airline by fleet reported yesterday that it flew 50.68 million passengers in financial yeart2015, up 11% from the previous year. AirAsia X, the long-haul affiliate of the AirAsia group, saw a 15% fall in its passenger traffic in 2015.

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