Up to 1.39 billion shares exchanged hands.

Decliners overwhelmed rising issues 527 to 179 with 949 stocks unchanged.

The Dow Jones Industrial Average in the United States slid 1.8 per cent on Thursday after Thornburg Mortgage and a Carlyle Group bond fund revealed troubles with mortgage-backed investments and failed to make margin calls.

Adding to the market's woes was a report by the Mortgage Bankers Association that US home foreclosures shot up to record levels in the fourth quarter.

Meanwhile, the US Federal Reserve said debt on homes owned by Americans exceeded equity for the first time since the central bank began tracking the figures in 1945.

'The two rounds of Fed rate cuts in January were to address the immediate housing and credit problems although boosting the economy is another objective,' said Westcomb Securities in a client note.

'We may see more actions by the Fed if the US credit problem deteriorates further.'

The Fed's policymakers are expected to further cut rates by as much as 75 basis points when they next meet on March 18.

Banking shares declined, with DBS Group losing 32 cents to 16.68 dollars, United Overseas Bank down 34 cents at 17.60 dollars and Oversea-Chinese Banking declining seven cents to 7.47 dollars.

Property heavyweights also retreated, with City Developments down 30 cents at 10.80 dollars, CapitaLand down 15 cents at 5.70 dollars and Keppel Land slipping 10 cents to 5.39 dollars.

Bourse operator Singapore Exchange fell 48 cents to 7.16 dollars. Singapore Airlines finished 24 cents lower at 14.78 dollars and Singapore Telecommunications dipped three cents to 3.65 dollars. -- AFP