Local investors picked up key stocks in the lead-up to the United States Federal Reserve meeting that may signal interest rate cuts.

The buying interest sent the Straits Times Index (STI) up 30.74 points, or 0.96 per cent, to 3,238.73.

It has become less a case of whether US interest rates will be lowered but a matter of when. In fact, other central banks such as those in Australia and the European Union added to the case for cuts.

Vanguard Markets managing partner Stephen Innes expected a neutral day of trading in Asia, but noted: "There's always an opportunity at every turn and the prospect of lower interest rates is an attractive proposition for the interest-sensitive Singapore market."

However, he added: "Unless the underlying global economic market malaise improves, I would view this as a short-term rebound."

The local market was a hive of activity, with 1.47 billion shares worth $1.19 billion traded, and gainers trumping losers 228 to 148. Only four of the STI's 30 components were in the red. Real estate investment trusts (Reits) and property developers, which would be among the main beneficiaries of lower borrowing costs, continue to be in favour.

CapitaLand Commercial Trust added 1.9 per cent to $2.11, while UOL was 1.8 per cent up at $7.28.

But ESR Reit faced a heavy sell-off, shedding 6.2 per cent to 53 cents on 53.8 million units changing hands. The Reit announced on Monday a joint venture deal to acquire a warehouse and undertake revamps at two existing properties that will be partly paid for by a private placement exercise. UOB Kay Hian trading representative Brandon Leu said: "I believe the key reason for the sell-off was the discount at which the private placement units were offered - at 51.5 cents - to Friday's close (56.5 cents)."

Financials raced away. DBS rose 0.5 per cent to $24.80, OCBC Bank gained 1.4 per cent to $10.95, and United Overseas Bank added 2 per cent to $25.60.

Telecommunications stocks continued their upward trend, led by NetLink NBN Trust. The business trust added 1.1 per cent to 88 cents on 31.6 million units traded. NetLink's rally also presented an opportunity for investors to take profit while some market watchers said the firm was overbought.

TrickleStar, a Malaysia-headquartered producer of energy-saving products, debuted on the Catalist board yesterday. It opened at 26.5 cents, up 1.9 per cent from its initial public offering price of 26 cents. The counter closed at 34 cents.