Singapore index edges up; OCBC heads south for 4th day

SINGAPORE (Reuters) - Oversea-Chinese Banking Corporation was headed for a fourth straight session of falls after the company said it is in talks to acquire Hong Kong's Wing Hang Bank, while the Singapore index rebounded after a two-day losing streak.

The benchmark Straits Times Index gained 0.2 per cent to 3,131.26 points by midday, while the MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 per cent.

OCBC shares fell as much as 1.4 per cent to a near one-month low at $9.73, on concerns about the high price tag of the deal.

More than 11 million shares were traded, three times its average 30-day full-day volume.

"Wing Hang is a moderate-sized asset in an unattractive market," CIMB analysts said in a research note. "We think OCBC should be well aware of this and not bid aggressively just for a better position to capture future Asian trade business."

CIMB expected OCBC's share price to remain under pressure from overpaying concerns.

OCBC, Singapore's second-largest bank, gained 4.8 per cent last year, lagging behind a 15 per cent rally in bigger rival DBS Group Holdings and a 7.2 per cent rise in United Overseas Bank.

CIMB is more positive on Singapore banks than their peers in Southeast Asia, as Singapore is evolving as a funding centre for Asian trade, which should more than offset weaker domestic loan demand.

Among other stocks, shares of Singapore Technologies Engineering edged down 0.3 per cent to $3.87, shrugging off an announcement on Monday that its marine arm, Singapore Technologies Marine, secured new orders worth about $446 million in the fourth quarter of 2013.

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