SE Asia Stocks-Fall on credit fears, but S'pore, Thailand rally

* Markets drop as financial fears resurface

* Singapore recovers after hitting one-week low

* Thailand pares losses to close flat

BANGKOK, April 21 - Southeast Asian stock markets were generally weak on Tuesday, hurt by renewed worries about the health of the U.S. financial system, but Singapore and Thailand recovered a little to end in positive territory.

A big increase in troubled loans at the largest U.S. bank, Bank of America, raised concern about the pace of any economic recovery, snapping a recent rally in equities worldwide.

The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> was down 1.65 percent at 0950 GMT, after hitting a six-month high last Thursday.

Indonesia's main index <.JKSE>, which rose 11.5 percent last week, fell nearly 2 percent, while Malaysia <.KLSE> snapped a five-day winning streak, ending down 0.18 percent.

The Philippines' main index <.PSI> fell 1.8 percent, a day after touching a seven-month high, and Vietnam <.VNI> fell 1.92 percent.

However, last-minute buying of Singapore banks, including Southeast Asia's largest, DBS Group <DBSM.SI>, helped nudge the benchmark Straits Time Index <.FTSTI> to close up 0.66 percent after it dropped as much as 3.25 percent earlier.

Among fallers in Singapore, Singapore Telecommunications <STEL.SI> fell 1.6 percent and Singapore Petroleum Corporation <SPCS.SI> dropped 5.2 percent as investors ignored its better-than-expected quarterly earnings after crude oil fell nearly 9 percent overnight to $46 a barrel.

Oil rig builder Keppel Corp <KPLM.SI> was down 1.5 percent.

Thai stocks <.SETI> also bucked the regional trend and reversed a 1.5 percent fall in early trade, closing up 0.02 percent, buoyed by late buying in heavyweight energy shares <.SETEN> and telecom firms <.SETIC>.

"Heavyweight commodity shares help bolster the Thai market, although the upward momentum has been halted by plunging oil prices," said Kavee Chukitkasem, head of research at Kasikorn Securities.

"But news about the merger in some PTT group units remained a key driver for the stocks and should continue in the medium term," he said.

Shares in Thailand's biggest energy firm, PTT <PTT.BK>, dropped 0.84 percent. The stock has risen 16 percent since early this month when the company said it was studying the possibility of merging its four main subsidiaries in a bid to cut costs and boost efficiency.

Bangkok Bank <BBL.BK> was hit hard, falling 3.13 percent, due partly to ex-dividend trade but also in reaction to a bigger-than-expected 13.5 percent fall in first-quarter net profit, mainly due to a fall in lending and net interest margins. [nBKK496559]

In Kuala Lumpur, heavyweight plantation stocks Sime Darby <SIME.KL> and IOI Corp <IOIB.KL> dropped 0.78 percent and 0.47 percent respectively, although Goldman Sachs said it was turning more positive on palm oil stocks due to a supply squeeze.

But Malaysian mobile phone firm Axiata Group <AXIA.KL> bucked the trend, rising 2.62 percent, extending Monday's 4.4 percent gain. Some said that was due to a report it could list its Bangladesh unit at some point. ($1= 34.50 Baht)