MANILA, Philippines -- (UPDATE 2) Stocks bounced back Tuesday, buoyed by Wall Street?s 176-point jump on firmer hopes that the US Federal Reserve will slash its key rates this week.

At the close, the 30-company composite index was up 20.68 points or 0.7 percent at 3,224.24, off a high of 3,267.48.

The broader all-share index gained 9.48 points or 0.5 percent to 1,970.46.

But decliners outnumbered advancers 55 to 46, while 64 were steady.

A total of 2.7 billion shares worth P3.5 billion were traded.

News wires reported that Wall Street posted gains overnight after investors took a gloomy new home sales report as a sign the Federal Reserve will lower rates this week.

Fed fund futures traded on the Chicago Mercantile Exchange are pricing in an 86 percent chance of a 50 basis point cut at the close of the Fed's two-day meeting, which kicks off later today.

"The uncertainty over US interest rates is keeping the market on edge. If the Fed cuts rate by only 25 basis points or does nothing at all, Wall Street might be disappointed," said Lawrence de Leon, an analyst at Accord Capital Equities.

"A 25 basis point cut may be viewed as not enough to reduce the risk of the US going into recession," he said.

In his final State of the Union address, President Bush on Monday urged Congress to pass a $145-billion economic stimulus bill as soon as possible, acknowledging the weakness in the US economy.

Bush and key House members warned against Senate efforts to make changes to the package agreed by the House and his administration, as they said doing so could delay the bill and possibly put it at risk of not passing.

A similar cut by the Bangko Sentral ng Pilipinas (BSP), the country?s central bank, in its policy meeting this week is also boosting sentiment at the local stock market.

Some economists are betting that Philippine policymakers will be as aggressive as the Fed in order to maintain the peso's yield differential against the dollar. A cut in US interest rates of more than 25 basis points tomorrow will bolster expectations that the Philippine central bank will also deliver an extraordinary cut of more than 25 basis points.

Economists are unanimous in saying that a rate cut of whatever size will help cushion the domestic economy against a recession in the US, the biggest market for Philippine exports and for jobs for Filipinos working overseas.

"For us, a cut in interest rates is always welcome considering that long-term borrowing rates are still over 8.0 percent," Joseph Roxas, Eagle Equities president said.

The Philippine Daily Inquirer reported that New York-based think-tank GlobalSource sees the BSP slashing its benchmark interest rates this Thursday by at least 50 basis points to ease the impact on the domestic economy of a US economic slowdown and to temper the peso?s strengthening against the dollar.

Also on Thursday the government will release the gross domestic product data for 2007, with growth projected as high as 7 percent, the best in three decades.

But investors have been largely ignoring positive news at home.

"The positive fundamentals of the Philippines have failed to help the local market decouple from the rest of the world," said Jose Vistan Jr., research director at AB Capital Securities.

Philippine Long Distance Telephone Co., the country's biggest company by market value, rose P35.00 or 1.3 percent to P2,810.00, off a high of P2,850.00.

Moody's Investors Service said after trading hours Monday that it has raised the outlook on PLDT's 'Ba2' senior unsecured foreign currency debt rating to positive from stable, following a similar change in the outlook of the Philippines' 'Ba3' country ceiling for foreign currency bonds.

The agency also affirmed PLDT's 'Baa2' local currency issuer rating with a stable outlook.

Philex Mining Corp., the country's biggest producer of gold and copper, gained 10 centavos or 1.1 percent at P9.00, off a high of P9.20.

"Mining stocks are at bargain prices after last week's sell-off. We are maintaining a positive outlook for the sector, given rising prices of metals and also because the sector has been a magnet for foreign investments," said Gomer Tan, vice-president for marketing at Regina Capital Development Corp.

Gold prices rallied to fresh record highs overnight on a weaker dollar and supply concerns. The most-active February Comex gold contract rose $16.40 to $927.10 an ounce in New York on Monday.

A pullback in property stocks amid the uncertainty over interest rates capped the market's gains.

Ayala Land Inc., the country's biggest developer, fell 25 centavos or 1.8 percent to P14.00. Megaworld Corp., the second-biggest homebuilder, was down 10 centavos or 3.6 percent at P2.70.

Food and drinks conglomerate San Miguel Corp.'s A-shares, reserved for Filipinos, rose 50 centavos or 0.9 percent to P54.50. Its B-shares, which have no ownership restriction, were steady at P55.00.

($1 = P40.72)