PHILIPPINE STOCKS soared to their best level in nearly three years Friday as upbeat global markets and strong corporate earnings lured more foreign investors into the local bourse.

The main-share Philippine Stock Exchange index rallied 1.86 percent or 68.2 points to close at a 32-month high of 3,734.70, extending gains for the fourth straight day. This was the highest touched by the index since Dec. 7, 2007, when it closed at 3,745.39.

Value turnover was heavy at P7 billion, suggesting a strong conviction for the upswing.

The gains were across the board but the holding firms, mining/oil and property counters benefited most as their sub-indices rose more than 2 percent. There were nearly three gainers for every decliner.

Defying general expectations of consolidation or sideways movement for this week due to positive surprises in Wall Street, the local index has rallied nearly 5 percent. Since the start of the year, the PSEi?one of the best performing in the region?has gained 682.02 points or about 22 percent.

?We are seeing general optimism in global markets which helped push our stock market higher today. Foreign investors continued to be net buyers at P1.79 billion, accounting for 44.7 percent of total turnover,? PSE president and chief executive Val Antonio Suarez said.

?The market is very strong. There?s so much foreign buying,? said Eagle Equities Inc. president Joseph Roxas.

He said the dip seen by the market last week after the bloody hostage-taking crisis in Manila attracted bargain-hunters as cash-awash investors had nowhere else to put in their money.

?Our market is still undervalued,? Roxas said.

Although local stock prices have gone up sharply since last year, so have corporate earnings expectations.

On the other hand, bond yields across the globe have drastically fallen since end-2008 as central banks eased monetary policy to counter the adverse impact of the US-led credit crunch.

Despite some profit-taking on telecom giant PLDT, the market surged as investors snapped up shares of SM Investments, Metrobank, EDC, Ayala, DMCI Holdings, MPIC, Megaworld, Filinvest Land, Universal Robina, Philex Mining, BPI, First Holdings, Banco de Oro and Alliance Global Group.

Overnight, the closely watched Dow Jones Industrial Index was up by another 50.63 points or 0.49 percent to 10,320.10 on broad-based buying.

?Market sentiment continued to be positive, with Europe and Asia benefiting from a strong close on Wall Street the previous night,? said investment bank Credit Agricole CIB. Doris C. Dumlao