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Singapore shares post worst weekly loss this year, Malaysian stocks fall

KUALA LUMPUR (Nikkei Markets) -- Singapore shares fell Friday to clinch their worst weekly decline in 2017 as flaring tensions between the U.S. and North Korea overshadowed upbeat economic growth data. Malaysian equities also declined for the week.

Markets in the rest of Asia too ended the week lower, with the Nikkei Asia300 Index shedding 2.6% after U.S. President Donald Trump's warnings to North Korea were met with further threats from the isolated state. Earlier this week, Trump said North Korea's threats would be met with "fire and fury," following which Pyongyang detailed plans to launch missiles into waters near the U.S. territory of Guam.

Singapore's FTSE Straits Times Index slid 1.3% to 3,279.72, ending the week 1.4% lower, its worst since December 2016. The losses on Friday came despite official data showing the city-state's economy grew by 2.9% on a year-on-year basis in the second quarter ended in June, above the 2.5% rate estimated earlier. The manufacturing sector expanded 8.1% year-on-year in the second quarter, following the 8.5% growth in the previous quarter.

"The reacceleration of services may be partially offset by a moderation in the manufacturing momentum due to less favorable case effects," Selena Ling, head of treasury research & strategy at OCBC Bank, wrote in a note to clients, maintaining her full-year GDP forecast at 2.5%. "Moreover, the ongoing geopolitical uncertainties, especially heightened North Korean tensions, may drag on market confidence if it drags on."

Heavyweight lender DBS Group Holdings shed 2.2% on Friday to end the week 3.2% lower. Oversea-Chinese Banking Corp. and United Overseas Bank also lost at least 1.1% each on Friday, but ended the week little changed to slightly higher.

Singapore Telecommunications ended unchanged at S$3.76 Friday, but lost 1.8% this week. The company on Friday reported a 6% year-on-year drop in net profit for the first quarter as contributions from India's Bharti Airtel tumbled and the company took a charge for workforce restructuring at Australian subsidiary Optus. Operating revenue for the quarter increased 8%.

Singapore Technologies Engineering fell 3.1% on Friday following a 12% drop in second-quarter net profit, due to a weak marine sector and its U.S. operations. It lost 2.9% this week.

Palm oil producer Wilmar International tumbled 6.4% on Friday after reporting a 68% plunge in pretax profit at the company's tropic oils segment.

Noble Group surged 18.6% on Friday after the debt-laden commodities trader reported a second quarter loss of $1.75 billion. The company's shares had plunged more than 30% on July 27 after it warned of a loss in the quarter.

The FTSE Bursa Malaysia KLCI fell 0.6% to 1,766.96 points, dropping 0.4% since last Friday for its first weekly loss in four weeks. Lenders led losses in Malaysia this week, with RHB Bank, AMMB Holdings and Hong Leong Bank sliding at least 2.5% each. CIMB Group Holdings, however, rose 2.7% since last Friday.

The Malaysian ringgit shed 0.4% against the dollar this week for its worst week in 2017. The week also marked the local currency's first weekly loss since early July. However, some analysts were not worried. The ringgit slipped 0.1% to 4.2935 to the dollar Friday.

"While news of escalating geopolitical tensions between the United States and North Korea are dominating the global headlines, investors should not currently be concerned over a potential shift of volatility in the Malaysian Ringgit," Jameel Ahmad, an analyst at FXTM wrote in a note to investors.

--Suzannah Benjamin and Jason Ng

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