SINGAPORE shares closed 3.50 per cent higher on Wednesday, drawing some strength from regional markets after the US government's latest bailout of the financial system, dealers said.

The main Straits Times Index rose 57.88 points to 1,711.13.

Volume totalled 864 million shares worth S$930 million, with 228 rising issues, 182 losers and 907 even.

The US Federal Reserve, the central bank, said it would pump US$800 billion (S$1.2 trillion) more into the economy to try to stabilise the financial system.

Up to US$600 billion will go towards purchases of mortgage securities, with another US$200 billion for asset-backed securities to help get credit to consumers, officials said.

'We're still seeing thin volume and bouts of selling on strength as investors are getting more cautious and not going in to buy aggressively,' the head of dealing at a local brokerage told Dow Jones Newswires.

'It's generally a trading market with little ammunition.'

Official data released Wednesday showed Singapore's factory output in October shrank a worse-than-expected 12.6 percent from the same month last year, which likely meant the economy will continue to decline in the fourth quarter, economists said.

The October data showed manufacturing - and the Singapore economy - 'could continue contracting' in the fourth quarter, said Kit Wei Zheng, economist with Citigroup.

Among blue chips, Singapore Airlines rose 14 cents to 10.44 Singapore dollars, Singapore Telecommunications was up 16 cents at 2.63 and ST Engineering put on eight cents to 2.24.

For the banks, DBS was flat at S$9.20, United Overseas Bank gained 70 cents to S$12.60 and Oversea-Chinese Banking Corp added 10 cents to S$4.90. -- AFP