Rising issues led decliners 599 to 179 with 899 stocks unchanged.

Wall Street rallied after banking giant JPMorgan Chase agreed to quintuple its offer, at 10 US dollars (S$13.8) a share, for Bear Stearns in view of shareholder opposition to the bargain-basement price offered in a hastily brokered deal last week.

Investor sentiment was also boosted after US existing home sales showed a surprise rebound in February, rising 2.9 per cent after six straight months of declines.

'I suppose there is a slight shift to optimism, that perhaps it's not all gloom and doom,' said Song Seng Wun, research head at CIMB-GK Research.

As the change in sentiment coincided with the last week of the first quarter, fund managers may have also taken the opportunity to window-dress their portfolios, Mr Song said.

Banking shares rallied, with DBS Group gaining 44 cents to 18.44 dollars, United Overseas Bank up 56 cents at 19.28 dollars and Oversea-Chinese Banking Corp rising 20 cents to 8.06 dollars.

Property heavyweights were also higher, with CapitaLand up 20 cents at 6.30 dollars, City Developments up 46 cents at 10.90 dollars and Keppel Land advancing 20 cents to 5.54 dollars.

Among blue chips, Singapore Airlines rose two cents to 15.04 dollars and Singapore Telecommunications finished eight cents higher at 4.01 dollars.

Singapore Press Holdings eased four cents to 4.52 dollars.