SINGAPORE stocks gained yesterday as hopes of the European Union (EU) stepping in to rescue debt-ridden Greece lifted the gloom for some Asian markets.

The Singapore market posted gains for a second straight session, with investors rummaging for bargains among stocks that had been sold down last week on fears over piling European sovereign debt.

The Straits Times Index capped yesterday's trading session more strongly compared to Monday, finishing 1.9 per cent higher. It added 51.4 points to end at 2,745.02 points.

While European officials have dismissed speculation of a bailout for Greece, they can pull the country out from the rubble if it is unable to refinance its heavy borrowings, The Wall Street Journal reported.

Some options include having Greece's European neighbours coming in with financial aid under the 'exceptional occurrences' clause in the EU charter, or have its debts backed by the guarantees of larger EU countries, the article said.

The move by European Central Bank president Jean-Claude Trichet to leave a central bankers' meeting a day earlier for a meeting among EU leaders also fanned speculation of neighbourly aid for Greece.

Besides mounting woes over Greece, concerns about the debt levels of Portugal, Ireland and Spain - earning them the dubious acronym of 'pigs' - are expected to continue weighing markets down.

The Singapore market shrugged off weaker numbers posted by Wall Street overnight.

The Dow Jones Industrial Average closed below the psychological 10,000 level for the first time in three months, ending one per cent lower with 9,908.39 points. The index was dragged down by bank stocks such as Bank of America and JP Morgan Chase, which were hit over concerns that the Federal Reserve is starting its preparations for credit tightening in the later part of the year.

Over in Hong Kong, stocks finally rose after a four-day selling spree, as stronger sales from property developers such as China Overseas Land & Investment and Hang Lung Properties boosted sentiment. The Hang Seng Index closed up 1.2 per cent to finish at 19,790.28.

But the markets of China, Hong Kong and Singapore are expected to see dwindling interest in the days ahead as investors close their positions before the Chinese New Year holiday early next week.

Volume has been thinning in Singapore, with 1.36 billion units being traded worth $1.33 billion yesterday. This compares with 1.66 billion units traded on Monday, representing a turnover of $1.38 billion.

The number of counters that gained stood at 220, against the 143 counters that fell in value. The remaining 521 counters - excluding warrants and bonds - were unchanged.

Among the gaining counters was that of Singapore Telecommunications (SingTel), which rose 2.71 per cent to finish at $3.03.

South-east Asia's largest telecom operator beat analysts' expectations by posting a 24 per cent jump in its third-quarter net profit to $991 million compared to a year ago before the start of trading yesterday.

Kim Eng Research kept a 'buy' call on SingTel and said that it was likely to raise its full-year profit forecast for the telco to about $3.8 billion from its current forecast of $3.7 billion.