They said many traders were on the sidelines ahead of the long Lunar New Year break which began after a half-day's trading on Wednesday.

The market is to reopen next Monday.

The blue chip Straits Times Index was 106.33 points lower at 2,932.09 on volume of 802 million shares worth S$1.43 billion.

Falling issues led decliners 452 to 192 with 1,096 issues unchanged.

A widely watched survey released on Tuesday showed the key services sector of the US economy contracted for the first time in nearly five years in January.

Economists said the Institute of Supply Management's index on non-manufacturing activity raised the odds that a recession is at hand in the world's biggest economy.

The index slumped from 54.4 per cent in December to 41.9 per cent in January, well below the level of 50 per cent indicating growth and stunning analysts expecting a much stronger figure.

The data sent US stocks into a tailspin.

'Given that Wall Street tanked last night and there are recession worries again, it's not a huge surprise that Singapore and the other regional markets fell. That, coupled with many traders going on holiday,' said Mr Song Seng Wun, regional economist with CIMB-GK Research.

Banking stocks were down, with DBS Group Holdings 58 cents lower at S$17.02, United Overseas Bank 54 cents lower at S$17.58, and Oversea-Chinese Banking Corp down 25 cents at S$7.30.

Property shares also fell. CapitaLand declined 26 cents to S$5.68, Keppel Land dropped 31 cents to S$5.83 and City Developments dropped 44 cents to S$11.46.

Singapore Telecommunications fell 19 cents to S$3.71 and Singapore Airlines dropped 42 cents to S$15.46.

Agribusiness giant Wilmar International closed down 25 cents at S$4.18. -- AFP