MANILA, Philippines — Local stocks surged by 2.86 percent on Wednesday and broke a key trading barrier to hit their highest level in nearly 18 months, perked up by upbeat trading in Wall Street which in turn was fueled by expectations of a global economic recovery.

This developed as the US Dow Jones posted hefty gains for the second straight day after Australia pioneered an interest rate hike, the first after the global financial meltdown, suggesting rising confidence on the global economy.

The main-share Philippine Stock Exchange index rallied for the second straight day and broke past the crucial 2,900 barrier to close at 2,967.06 on Wednesday, led by gains across all counters.

The biggest gainers were in the services, mining and oil as well as property counters which went up by 3.46 percent, 3.19 percent and 2.7 percent, respectively.

The financial, industrial and holding firm sectors were likewise up by 2.5 percent, 2.26 percent and 1.55 percent, respectively.

Leading the gains of the index were Philippine Long Distance Telephone Co., Metropolitan Bank and Trust Co., Ayala Corp., Manila Electric Co. and Ayala Land Inc. Value turnover at the local bourse was heavy at P5.32 billion, with 87 advancers edging out 20 decliners and 47 unchanged stocks.

"The Dow led the world markets and got a boost from news of Australia raising its key rates. The country down south was the first to make such move after the collapse of global financial markets.

This encouraged investors to take positions, seeing that policymakers are beginning to have a positive outlook in the economy," said AB Capital Securities analyst Maria Arlysa Narciso.

As such, she said the local index punctured the 2,900 resistance after a long period of consolidation. The breakout was accompanied by a good amount of volume, she added.

"Based on the growing investor activity, it seems that sentiment will begin to turn positive this time. Made even better by the move of Australia's central bank, we can hope for the better and perhaps see other economies support a recovery soon. Though data from both local and foreign countries do not yet show a strong economic comeback, we are sure that the economies are slowly making (their) way out of the downturn," Narciso said.

"All indicators point to having confidence in sustaining that advance. The new resistance now lies at 3,100," she added.