MANILA, Philippines -- Shares in major Philippine property developers were firmer on Tuesday, rebounding from recent losses on expectations that home sales will remain strong due to low domestic interest rates.

"We're seeing renewed interest in property stocks, which are really oversold but still fundamentally sound," said Gomer Tan, vice president for marketing at Regina Capital Development Corp.

"We've been worried about the US subprime mortgage mess but we believe that the local property sector is still enjoying good sales, partly because of low interest rates," he said.

Outperforming its peers, Megaworld Corp. -- the country's second-biggest home builder in terms of market value -- rose 14 centavos or 6.2 percent to P2.40. Megaworld shares are down 36 percent so far this year, compared to a nearly 20 percent decline for the Philippine composite index.

Ayala Land Inc., the country's biggest developer, was up 25 centavos or 2.3 percent at P11.00. The stock has fallen about 23 percent year to date.

Filinvest Land Inc advanced 5 centavos or 5.1 percent to P1.04.

Domestic interest rates may have bottomed out as higher food and fuel prices pushed inflation higher in the first two months of the year. But there are no signs yet that the Philippine central bank will increase key interest rates anytime soon.

The central bank cut its rates four times between October 2007 and last January.

The government's improved fiscal performance also cancels out any upward pressure on interest rates.

Last week, the Department of Finance reported that the government had a budget deficit of P13.9 billion in January, less than half the deficit it incurred a year earlier because of lower interest payments.

Insisting that its cash position remains strong, the government rejected all bids for benchmark Treasury bills for the third straight auction on March 17, given lean volumes and as banks pushed for higher rates.

On Monday, the government announced its decision to stop offering 91-day and 182-day T-bills at fortnightly auctions in the second quarter, although it would double its offer of one-year bills from the current size of P3 billion per auction.

Banks use the average 91-day T-bill rate as a benchmark in pricing loans. At the last successful auction, the three-month rate averaged 3.673 percent.

($1 = P41.60)