REGIONAL bourses experienced cautious trading sessions yesterday as the ramifications of the ongoing Dubai World default continued to be felt.

Market worries were reignited when Dubai World subsidiary Nakheel disclosed that its liabilities had jumped 7 per cent to US$3.6 billion (S$5 billion) in the first half of this year.

The steadily strengthening greenback and news from Japan that the economy performed below expectations in the third quarter - gross domestic product was up by only 0.3 per cent, significantly below the forecast 0.7 per cent - also contributed to losses in Asian markets.

Tokyo's Nikkei 225 Index fell 1.34 per cent, while Hong Kong's Hang Seng Index dipped 1.44 per cent. The Shanghai composite index fared even worse and was 1.73 per cent down on the day.

The benchmark Straits Times Index outperformed its regional counterparts, falling just 0.3 per cent, or 8.29 points, to close at 2,797.21.

It was helped by United Overseas Bank's 24-cent advance to close at $19.94, as well as that of OCBC Bank, which was ahead 10 cents at $8.62.

The other large local lender, DBS, did less well and shed 18 cents to end at $14.68.

A gain in oil prices, which rose above US$73 per barrel yesterday after several days of falls on reports of a big drop in United States crude stocks, also had a drag on commodity, marine and transport companies, with investors succumbing to profit-taking.

Commodity firm Wilmar International lost six cents to close at $6.33, while Noble Group fell three cents to $3.19. Golden Agri-Resources was down half a cent to close at 48.5 cents.

Keppel Corp, with key business interests in the offshore and marine industry, shed 20 cents off its share price to close at $8.29.

Singapore Airlines fell 14 cents to $13.56.

One trader commented that investors were being cautious, leading to the commodity stocks closing weaker. 'Potential buyers are taking a wait-and-see attitude, while there is some profit-taking.'

Much of the action yesterday centred on penny and small-cap stocks. Electronics distributor Achieva was the most actively traded counter, with 170.4 million shares changing hands. Major shareholder Henry Lim sold his entire stake of 121.5 million shares, or 23.4 per cent of the company, to lifestyle firm SUTL Global.

Achieva added half a cent to close at 11.5 cents.

China XLX Fertiliser, which on Tuesday had put on 51 per cent to take it to 77 cents following its dual listing in Hong Kong, was also actively traded to the tune of 83.1 million shares.

But some of the shine was taken off its stellar Tuesday performance, with some investors cashing in on their profits and dragging the counter down four cents to 73 cents.

Traders do not expect interest in these small stocks to last much longer though.

AmFraser Securities strategist Najeeb Jarhom said: 'I don't expect the interest to be sustained. Investors will refocus on blue chips again, perhaps by the end of this year or as we enter 2010.'

jonkwok@sph.com.sg