STI slightly up at midday

SINGAPORE - Singapore shares were slightly up at midday on Thursday in thin trading with most players sidelined by the year-end holidays and ongoing concerns about the euro zone.

Electric equipment maker SMB United was the day's highlight, surging nearly 10 percent after a takeover bid by Japan's Osaki Electric Co.

At 0500 GMT, SMB shares were 9.6 percent higher at S$0.40, matching Osaki's offer price which trumped an earlier bid of S$0.32 a share made by China's Boer Power Holdings . Some 9.9 million SMB shares were traded, around 6.5 times the average daily volume in the last 30 days.

The Straits Times Index (STI) was up 0.05 percent, or 1.45 points, at 2,667.70 around 0500 GMT. Some 250.1 million shares worth S$191.7 million were traded at the halfway mark, compared with 221.1 million shares worth S$167.1 million at the same time on Wednesday.

Markets are expected to closely watch an Italian debt auction later in the day for signs of progress in the euro zone. Rome plans to sell up to 8.5 billion euros (S$14.3 billion) of bonds, including 10-year bonds.

DMG & Partners said in a report that it expects further weakness in the first half of 2012 due to the persistent euro zone debt problems, but the STI may recover to end the year about 15 percent higher around the 3,022 level.

"Since October 2011, the macro global environment has deteriorated further and we lowered the target prices for stocks under our coverage," DMG said. "We believe the STI would first trend down in first half of 2012 before rebounding later."

Currently, the brokerage recommended defensive stocks in the land transport and telecommunication sectors.

Land transport stocks such as ComfortDelGro and SMRT Corp have stable earnings and could benefit from higher taxi rental charges, following a hike in taxi fares in the city-state, DMG said.

It added that while telecommunication stocks - Singapore Telecommunications, StarHub and M1 - may not offer much share price upside, their downside is limited due to their earnings resilience.