SINGAPORE (Thomson Financial) - Singapore shares were higher at midday on Friday as Wall Street's advance and the continued easing in oil prices encouraged investors to snap up blue chips.

Overnight, the Dow Jones Industrial Average rose 0.7 percent to 12,992.66 after the Philadelphia Federal Reserve reported that regional manufacturing activity in the United States was contracting at a much slower pace in May compared to April.

Light, sweet crude for June delivery fell 10 cents to settle at $124.12 a barrel on the New York Mercantile Exchange, calming worries about inflation.

Recent data from the United States suggest that a deep recession may not occur, bolstered by hopes that the fiscal stimulus package and the Fed's interest rate cuts will work to boost economic activities in the second half, analysts said.

'We are in a situation here where the U.S. has thrown a lot of bad news on the economy and the credit losses, but the data so far has not shown significant declines,' said Malcolm Wood, Asian Equity strategist at Morgan Stanley in Hong Kong.

'However, investors are likely to remain cautious towards today's closing as next Monday is a public holiday for Singapore,' said Goh Mou Lih, research head at Westcomb Securities, in a note to clients.

At midday, the Straits Times Index had risen 29.51 points or 0.9 percent at 3,236.94.

Gainers outnumbered decliners 311 to 193, with 1,069 stocks unchanged.

There were 859.0 million shares traded, valued at S$911.0 million.

Industrial conglomerate Keppel Corp led the market's charge, rising 3.8 percent to S$11.94.

Other offshore and marine plays were also higher. SembCorp Marine rose 1.7 percent to S$4.19 and COSCO Corp was up 1.4 percent at S$3.56.

DMG&Partners Securities rated the oil and gas sector 'overweight' following a visit to Singapore shipyards.

'We... were impressed by the buoyant activity at the yards. With strong order books of S$12.7 billion and S$6.6 billion, respectively, for Keppel Offshore&Marine (Keppel O&M) and SembCorp Marine (SCM), we remain optimistic on the outlook for the offshore&marine sector,' said Serene Lim, analyst at DMG&Partners.

Investors continued accumulating stocks of index heavyweights that had posted solid first-quarter earnings. Among them, Neptune Orient Lines rose 1.0 percent to S$3.92, Singapore Telecom added 0.3 percent to S$3.70 and Singapore Airlines advanced for the seventh straight session, gaining 1.0 percent to S$16.18.

Olam International rose 2.1 percent to S$2.93 after reporting on Thursday that its net profit in the third quarter to March jumped 38 percent to S$55.8 million due to strong demand and higher commodity prices.

Property heavyweights were higher, with City Developments up 1.2 percent at S$11.84, Keppel Land up 1.0 percent at S$5.82 and CapitaLand up 2.7 percent at S$6.89.

Banks were mixed, with DBS Group 1.2 percent higher at S$20.30 and Oversea Chinese Banking Corp. up 1.4 percent to S$9.00 while United Overseas Bank slipped 0.3 percent to S$20.32.

($1 = S$1.37)

pearl.bantillo@thomsonreuters.com

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