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Malaysian shares seen falling after U.S. stocks slide

Published: 17 Feb 2009 18:06:37 PST

KUALA LUMPUR, Feb 18 - Malaysian shares are likely to fall on Wednesday following a sharp slide in the U.S. stocks overnight, as fears of a deepening recession grew.

The Dow Jones <.DJI> and Standard & Poor's 500 <.SPX> both fell to three-month lows, as investors felt the economic outlook was set to deteriorate, despite U.S. President Barack Obama signing into law a $787 billion economic stimulus package.

"The steep fall in the U.S. as well as weaker European markets are negative for Malaysian stocks, and I see the index testing the 880 points support level today," said a dealer at a local brokerage house.

Malaysia's benchmark stock index <.KLSE> closed down 0.95 percent at 898.53 points on Tuesday.

Dealers said plantation stocks, among the most heavily weighted on the main index, are also likely to come under pressure after oil fell nearly 7 percent to below $35 a barrel on Tuesday.

The third-biggest listed planter Kuala Lumpur Kepong <KLKK.KL> is to report first-quarter earnings on Wednesday, which dealers said will give an indication on how badly the plantation stocks have been hit by falling palm oil prices.

Here are the factors that may affect Malaysian stocks on Wednesday. ----------------------MARKET SNAPSHOT @ 2339 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG S&P 500 <.SPX> 789.17 -4.56% -37.670 USD/JPY <JPY=> 92.40 -0.01% -0.010 10-YR US TSY YLD <US10YT=RR> 2.904 -- 0.251 SPOT GOLD <XAU=> $966.75 -0.17% -1.600 US CRUDE <CLc1> 34.91 -0.06% 0.000 DOW JONES <.DJI> 7552.60 -3.79% -297.81 ASIA ADRS <.BKAS> 81.45 -6.19% -5.37 ------------------------------------------------------------- > US STOCKS-Market sinks to Nov lows on bank, recession fears[.N] > SEA Stocks-Skid on financial gloom, S'pore near 3-mth low [.SO] > Maybank not in talks with Dubai on Bank Islam stake[nKLR385184] > Malaysia's Tenaga says to cancel repurchased debt [nKLR290861] > Top Kuwait Islamic bank mulls Asia acquisitions [nKLR280720] > VEGOILS-Palm eases to 1-week low on weak exports [POI/] > U.S. oil falls 7 pct to below $35 on demand, economy [O/R] > TREASURIES-Bonds rally as stocks slide [US/] > FOREX-Dollar gains broadly while euro, yen tumble [USD/] > PRECIOUS-Gold sent to 7-month high by risk averse [GOL/]