Singapore's benchmark Straits Times Index hit a record high on Thursday - in just under two months, recovering from a series of market plunges last month, as the crisis-hit mortgage market in the United States hurt investors'confidence worldwide.

STI rose 64.68 points, or 1.77 per cent, to 3714.77 on Thursday, easily crossing the 3,700 barrier for the first time. Other bourses - Hong Kong and Australia - also ended on a record high note, following sharp overnight gains made by Wall Street.

In Singapore, the gains were mostly notched up by banks - DBS Group Holdings was up 90 cents while United Overseas Bank rose 50 cents - and marine plays such as Keppel Corp, up 30 cents at $14.30, and Cosco Corp which advanced 10 cents to $5.65.

And the better market sentiment helped to boost daily market volume to 2.95 billion shares worth $3.14 billion. This is way above the daily average 2.25 billion shares worth $2.14 billion traded over the past four weeks.

Analysts attributed the buoyant investors' mood to anticipation of further rates cut by the US Federal Reserve before the end of the year.

And as this is the final trading week before the third quarter draws to a close, there is also a 'fair amount of window-dressing' by fund managers which helped to push share price of heavyweights such as SingTel up 18 cents to $4.02.

By dressing up the prices of these heavyweights, these fund managers will look good when they send out their quarterly reports to their clients to give a breakdown of their performance.

"Anybody, who came back from a long holiday in August, would find it difficult to believe that the market had been rocked by violent turbulence in the past few weeks, going by the remarkable recovery in share prices achieved by some of the blue-chips," said a dealer.