MANILA, Philippines -- (UPDATE) Shares snapped a five-day losing streak to close higher on Wednesday as investors picked up bargains, but gains were modest and volumes thin given persistent worries about inflation and caution ahead of the Federal Reserve's decision on interest rates.

"We're having a technical rebound in an overwhelmingly bear market. We're having a slight pause in selling ahead of the outcome of the Fed meet which is expected to keep rates steady," said Jose Vistan Jr., research director at AB Capital Securities.

The 30-company composite index closed up 35.93 points or 1.5 percent at the day's high of 2,510.80, rebounding from a weak start.

The all-share index rose 16.71 points or 1.1 percent to 1,597.62.

There were 63 advancers and 25 decliners, while 51 issues were unchanged.

Turnover remained lean at P2.2 billion but was up from Tuesday's P1.7 billion.

The Fed ends its two-day meeting on Wednesday and is widely expected to leave the Fed Funds Rate unchanged at 2.0 percent following a series of rate cuts since September.

But the focus will be on the Fed's statement as investors hope to get more clues on its future policy moves after the latest data suggested continuing trouble for the US, a key market for Philippine exports, and the global economy.

The US Conference Board released on Tuesday a report showing its June consumer confidence index at 50.4, far below economists' expectation of 56.5 and May's reading of 58.1.

Adding to the anxiety on Wall Street, the S&P/Case-Shiller index showed on Tuesday that US home prices fell in April at the fastest pace since 2000.

On Wednesday, index leader Philippine Long Distance Telephone Co. rose 1.7 percent to P2,415.00.

Philippine National Bank (PNB) was up 1.7 percent at P30.00 after shareholders of both PNB and Allied Banking Corp. approved their merger at separate annual meetings on Tuesday. PNB will be the surviving entity and will become the country's fourth-largest bank in terms of assets after the merger.

Battered banking majors rose with Bank of the Philippine Islands up 3.5 percent at P45.00, Banco de Oro Unibank up 3.5 percent at P45.00, and Metropolitan Bank & Trust Co. up 1.5 percent at P33.50.

($1 = P44.50)