HEAVY selling of palm oil firm Wilmar International's shares yesterday contributed significantly to the Straits Times Index's (STI) 29.48-point or one per cent loss at 2,995.59.

A soft opening for Europe in the late afternoon added to the pressure, which resulted in the index falling sharply in the afternoon after it had touched an intraday high of 3,019.

Wilmar's 64-cent or 11 per cent loss to $5.22 cut 18 points off the STI, more than half the final loss. The selling came in heavy volume of 82 million shares, and this helped boost dollar value turnover to 2.3 billion units worth $2.1 billion excluding foreign currency units.

The motive for the selling was the release of Wilmar's latest results which, in some quarters, were described as being disappointing.

In its 'sell' report, for instance, OCBC Investment Research said if it were to strip away non-operating items and biological assets gains, Wilmar's core earnings would have come in around US$1.52 billion, or around 9 per cent below forecast.

'Going forward, management believes that things should not get worse from here, but it retains a slightly cautious tone, especially towards its Oilseeds & Grains business which is still facing margin pressures in China due to the excess capacity there still,' said the broker. 'Market appears to be anticipating a much stronger recovery, but not supported by the 4Q11 results and its outlook.' OCBC Investment Research's fair value for Wilmar is $5.15.

The other large index losers were two from the Jardine stable - Jardine Matheson and Jardine Strategic, whose combined falls accounted for a further 8 points. Within the STI there were 7 rises versus 18 falls, the largest positive contributor being SingTel which rose 3 cents to $3.10.

On the external front, there was a sense that markets, having bought in anticipation of Greece being given its second bailout payment, were now selling following news that the package was approved on Monday. Alternatively, it was possible that the selling was because of a realisation that the bailout is not enough.

Research firm Ideaglobal said in its daily commentary yesterday that the finalised measures which aim to bring Greece's debt/GDP ratio to 120 per cent by 2020 may not be sufficient for Greece to regain debt sustainability in the long term, and that leaked reports show officials already fear Greece's debt could remain at 160 per cent if the country fails to implement the austerity reforms under the bailout agreement.

In a Tuesday report, Schroders' European economist Azad Zangana said the second bailout is insufficient and that in the longer term, the plans are optimistic and fanciful.

'In our view, the level of austerity required by the plan would plunge Greece into an economic depression,' said Mr Zangana, who added that further risk comes from the upcoming elections currently scheduled for April.

'The incumbent centre-left Pasok party and the centre-right New Democracy party now receive less than 50 per cent of the popular votes in Greek media polls,' said Mr Zangana. 'The move away from the centre and towards extreme left and right wing parties is a concern ... we think that a return of sovereign crisis risk over the next year remains very high, and we cannot rule out the prospects of Greece eventually leaving the monetary union.'