MANILA, Philippines—Local stocks rallied by 2.8 percent yesterday, taking cue from the bullish Wall Street trading overnight as investors across the globe cheered further signs that the global recession may be easing.

The main-share Philippine Stock Exchange index, which was on a winning streak for the third trading day, gained 60 points to close at 2,197.20. The relatively resilient first-quarter local corporate results and further slowdown in inflation also boosted confidence in stocks despite the cautious trading on index heavyweight PLDT.

Appetite for equities across the globe surged following a report in the United States of a 3.2-percent increase in Americans’ purchases of previously owned homes, which beat forecasts of zero growth. This news sent the S&P index 3.39 percent higher, reversing the losses earlier this year.

Global investor confidence also surged on reports that China’s manufacturing output increased for the first time in nine months, further boosting hopes that the world may have seen the worst of this downturn.

The local stock market rally yesterday was led by the property sector, whose index went up 8.33 percent. The counters for the financial sector, holding firms as well as mining and oil also jumped by 4 percent, 3.8 percent and 4.2 percent, respectively.

Investors snapped up shares of Megaworld, Energy Development Corp., Banco de Oro, Metrobank, Filinvest Land and Ayala Corp.

On the other hand, there was profit-taking on PLDT, which reported an 8-percent year-on-year decline in unaudited first-quarter consolidated income to P9.6 billion.

There were 106 gainers as against 26 decliners and 32 unchanged issues. Value of trading was heavy at P3.32 billion.

AB Capital Securities said the market also welcomed the decline in the April inflation rate.

“A lower inflation rate gives the BSP (Bangko Sentral ng Pilipinas) added flexibility to further cut interest rates or reduce banks’ reserve requirements to stimulate economic growth. These monetary measures help money to circulate and grow by inducing demand for borrowing as debtors are able to acquire loans at lower costs,” it said.

With the global community in an optimistic stance, local shares are expected to continue to advance today. But as the index was hitting overbought levels, a pullback may also be a possibility, AB Capital Securities added.

“The market has carved out a new trading range, however, with the 2,200 level looming, we may see a temporary halt to the market’s rise,” BPI Capital said.