The peso and local stocks extended their gains yesterday but world markets remain volatile amidst investor nervousness that "not everything from the US has been disclosed and priced in".

The Philippine Stock Exchange index was up 2.91 percent or 89.16 points to 3,147.42. The peso strengthened to 41.04 but closed at 41.18. The peso traded from 41.04 to 41.25, the closing rate for Wednesday.

Other markets in Asia mostly rose after the US government outlined a plan to bail out bond insurers facing more write-downs.

Singapore’s Straits Times Index rose 2.2 percent, paring earlier gains of nearly 5 percent, Malaysian stocks climbed 2.1 percent, while shares in Indonesia were up 1.6 percent.

Thai stocks fell 1.6 percent and Vietnam shares lost 1.6 percent.

New York’s insurance regulator on Wednesday pressed major banks to put up billions of dollars to support ailing bond insurers, a move which supported sentiment on Wall Street and Asia, but market watchers said any bounce in global markets would be short-lived as the trading mood still remained glum.

"I’m not convinced that it’s over. There’ll still be volatility in the short term as the US economic slowdown has not been completely priced in," said Daphne Roth, vice president of Asia Equity Research at ABN AMRO Private Banking.

Early strong gains in Southeast Asian markets were pared after France’s second-largest listed bank Societe Generale said it uncovered a fraud by one of its traders, which will cost the lender 4.9 billion euros ($7.16 billion).

SocGen also announced further write-downs of 2.05 billion euros related to the global credit crunch and said it would raise 5.5 billion euros through a capital increase.

Asian currencies also rose after a rebound in US equity markets spurred a light rally in regional stocks.

The US central bank’s 75 basis point cut in the fed funds rate on Tuesday initially halted a rout in global stock markets, but soon stoked fears the world’s largest economy might be in deeper trouble than markets have priced in.

The Malaysian ringgit, Philippine peso, South Korean won and Singapore dollar led the regional gainers, rising by more than 0.4 percent each, but traders warned that currency markets could be volatile in the near term.

The peso firmed to 41.04 but stayed clear of a 7-1/2-year high of 40.5 per dollar which it hit on Jan. 15.

"It’s pretty hard to guess whether global markets will stabilize but I think fundamentals are still supportive of the peso," a trader in Manila said.

In the Philippines, gainers swamped losers 101 to 24 while 40 stocks were unchanged.

Trading turnover was at 2.36 billion for nearly P5 billion.

Foreigners continue to dump local shares, this time worth P843 million.

"I think it is still very cautious. The market remains very volatile and investors are worried, this has happened so very often," said Eagle Equities president Joey Roxas.

Philippine Long Distance Telephone Co. (PLDT) was up P85 to P2, 670.

Ayala Corp. was up P5 to P455. Unit Ayala Land, Inc. (ALI) was up P0.50 to P14.

Megaworld was up P.10 to P2.90.

Meralco was up P3 to P74.

Bank of the Philippine Island was up P2.50 to P59.50.

SM Investments Corp. was up P7.50 to P285.