Local shares shrugged off concerns over weak global economic growth to climb to their highest level in nearly two years yesterday, though analysts were mixed on whether this increase could be sustained.

The benchmark Straits Times Index (STI) gained 32.15 points or 0.95 per cent to 3,423.35, even as other major markets in Asia fell due to gloomy economic data released yesterday.

Banks and companies in the Jardine group were the main stocks that propelled the local index higher. Telecommunications group Singtel also shone, rising to its highest since October 2007.

The local market’s increase stood in stark contrast to declines in other parts of Asia, which were largely owing to concerns over China’s economy.

Hong Kong slipped 0.1 per cent, Tokyo shed 0.7 per cent and Shanghai tumbled 2.6 per cent. Seoul, however, inched up 0.2 per cent.

An unofficial gauge of China’s factory activity released yesterday showed that Chinese manufacturing shrank last month for a second consecutive month.

That came a day after the Chinese government’s official estimates showed a decline in manufacturing activity for the first time in more than two years.

Gross domestic product (GDP) growth in the United States also came in weaker than expected on Friday.

Analysts said that Singapore shares may have been helped by the effects of recent central bank actions. “A weak euro has largely reduced the costs of our imports, while the recently softened Singapore dollar is set to boost our exports,” said Phillip Futures analyst Howie Lee.

However, Nomura South-eastAsia equity strategist Mixo Das said that there were “no clearly visible catalysts at this point” for the index to gain further ground.

“We don’t make much of new highs on the index level, because earnings estimates for the STI index are at all-time highs already…We see the gains in the index slowing down going forward, but no outright reason to be bearish.”

Stocks that did well included banks such as United Overseas Bank, which jumped 32 cents to $ 23.50, and OCBC Bank, which gained 11 cents to $ 10.51.

Singtel rose four cents to $ 4.12, after Friday’s news of its major joint venture with Sony Pictures Television and Warner Brothers Entertainment.

The joint venture will offer online video streaming to as many as 1.5 billion customers across Indonesia, Thailand, the Philippines and India.

Get MyPaper for more stories.