Local share prices ignored the better-than-expected earnings data on US companies and plunged on profit-taking as concerns on the country’s economy and politics dimmed investors’ hope of a similar good performance of local companies.

The Philippine Stock Exchange index broke support to close at 2,890.92, a decline of 0.85 percent or 24.75 points.

The broader all-shares index was down 0.59 percent or 10.55 points to 1,779.51.

Losers edged gainers 47 to 30 with 69 stocks unchanged.

Trading turnover reached 520.58 million shares worth P2.19 billion.

The market started the session on a high note, improving by 19.22 points on its briskest hour before profit-taking pulled the index lower and below the 2,900 support level.

"It shows there’s not enough confidence prevailing in the market," said Chelsea Dipasupil, research head of RCBC Securities, Inc. said.

Dipasupil said that while there was a good lead the local market can track to move up, domestic concerns on the political and economic front derailed whatever momentum the market may develop.

"Aside from the fact that there’s the ongoing concern on rice supply, there’s also concern that the market will continue to decline due to economic and political troubles," she said.

Dipasupil said investors may have disregarded the good earnings result in the US because these tend to pass while the US trouble still remains.

"There is a chance market decline may continue until the end of the year," she said.

Most actively traded Philippine Long Distance Telephone Co. (PLDT) was down P30 to 2,675. Ayala Land, Inc. was down P0.25 to P10.50. Manila Electric Co. was up P1 to P82. Alliance Global, Inc. was steady at P3.95. Megaworld Corp. was down P0.10 to P2.18. San Miguel Corp. A and B shares were both steady at P44 and P46 respectively.

Elsewhere in Asia on Monday, shares powered to their highest in more than seven weeks as financial firms rallied on hopes that the worst of the credit crisis is over, and the dollar gained against the Japanese yen.

The US currency was at its highest level to the yen since early March, with Asian stock and currency markets further comforted by stronger-than-expected quarterly results from US firms such as Honeywell and Caterpillar.

But oil prices hovered near a record $117 a barrel reached on Friday amid concerns of supply disruptions in Nigeria and comments by OPEC that it saw no need to increase production. Gold rebounded after the previous session’s sell-off.

"The market is clearly trying to say that the worst of all these subprime and credit issues are now out, so we can move on," said Greg Goodsell, equity strategist at ABN AMRO.

"But it remains to be seen whether that is really the case. It’s hard to be conclusive that there aren’t further write-offs out there in the financial sector."

The MSCI measure of Asian stocks beyond Japan rose 2.3 percent as of 0200 GMT, earlier hitting its highest level since Feb. 29.

Expectations that the credit crisis is easing have lifted the MSCI index, which last month hit its lowest since August 2007, when credit concerns first began surfacing.

Forecast-beating earnings from Merrill Lynch and JPMorgan Chase last week helped reinforce that confidence, as did a string of better-than-expected earnings from US firms, which are seeing overseas sales offset weaker domestic consumer demand.

Citigroup Inc on Friday posted a $5.1 billion quarterly loss and said it will cut another 9,000 jobs, but its shares still gained amid expectations that the top US lender was taking steps to move past its credit problems.

Also on Friday, diversified US manufacturer Honeywell International Inc and construction and mining equipment maker Caterpillar Inc beat expectations, contributing to the improving mood in global markets. and

Tokyo’s Nikkei average rose 1.7 percent, led by financials such as Mitsubishi UFJ Financial Group and exporters such as Honda Motor Co Ltd, which stand to benefit from a weaker yen.

Shanghai’s main stock index rose 4.7 percent, while stocks in Australia and Singapore gained over 2 percent. South Korean stocks rose 1.6 percent.

The improving confidence also lifted a beleaguered dollar by 0.2 percent to 103.93, approaching a seven-week high of 104.66 hit on electronic trade platform EBS on Friday.