Optimism was in short supply in the market yesterday with investors playing it so safe that local shares gave up their gains from earlier on in the day to end in the red.

The benchmark Straits Times Index (STI) closed 0.8 per cent, or 22.08 points, lower at 2,869.55, with losers outpacing gainers 288 to 227 on trade of 3.31 billion shares worth $2.41 billion.

The decline came despite gains overnight on Wall Street, although most markets across the region did manage to end the day in the black.

Malaysian shares advanced 1.2 per cent, the Hang Seng rose 0.3 per cent and the Nikkei 225 ended 0.5 per cent higher, but Jakarta stocks finished 0.4 per cent lower.

Axi chief global markets strategist Stephen Innes said Asian markets "paused for breath" after the global "melt-up" on Tuesday, when United States indices touched multi-year highs.

One of the day's top gainers was Singapore Airlines, which added 3.9 per cent to $4.58. Other STI advancers included DBS Group, Hongkong Land and Jardine Cycle & Carriage. Nanofilm Technologies was also among the biggest gainers, closing 4.7 per cent higher at $3.10.

At the other end of the spectrum, Jardine Matheson Holdings (JMH) and Jardine Strategic Holdings (JSH) were among the biggest losers. JMH fell 0.8 per cent to US$54.42 while JSH lost 1.7 per cent to US$24.83.

The trio of lenders ended the day mixed. DBS Bank gained 0.3 per cent to $25.68, UOB shed 1.5 per cent to $23.24 and OCBC Bank fell 1.5 per cent to finish at $10.13.

Sembcorp Marine was the most heavily traded, with 383.9 million shares done. The stock closed 1.2 per cent lower at 16.6 cents.

Mr Innes forecasts that investors will turn "profit and loss-defensive" next month.