The Singapore stock market on Tuesday saw its winning streak hit five sessions, gathering more than 220 points or 15 percent in the process. The Straits Times Index has finished higher in seven of the last eight trading days, breaking through resistance at 1,700 points - but now analysts say that the market could see a modest retreat at the opening of trade on Wednesday.

The global forecast for the Asian markets calls for a correction to the downside in the form of profit taking as many of the regional bourses are riding moderate winning streaks and have posted sizeable gains in recent weeks. The financials in particular have risen sharply in the last week and could be ripe for some selling pressure. The European markets ended the trading day mixed, while the U.S. markets all finished lower - and the Asian bourses are tipped to follow suit.

The STI finished sharply higher again on Tuesday, boosted by the continued rally in the financial sector. A mixed performance among the property stocks served to limit the gains, however.

For the day, the index soared 42.26 points or 2.5 percent to close at 1,706.34 after trading between 1,681.22 and 1,723.20. Volume was 1.7 billion shares, with 291 gainers and 163 decliners.

Among the actives, DBS closed up 4.8 percent, while United Overseas Bank gained 5 percent, OCBC added 3.4 percent, City Developments was down 2.3 percent, CapitaMall Trust was up 13.3 percent and CapitaLand gained 4.1 percent.

The lead from Wall Street has cooled as stocks moved back to the downside going into the close of trading on Tuesday after failing to sustain an afternoon recovery attempt. The major averages all ended the day firmly in negative territory, partly offsetting the standout gains posted in the previous session. While profit taking contributed to some weakness in the markets, selling pressure remained relatively subdued, helping the major averages to hold onto the bulk of Monday's gains.

For much of the session, traders were keeping a close eye on Capitol Hill, with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner testifying before the House Financial Services Committee. During his testimony, Geithner said the near-collapse of AIG (AIG) highlights broad failures of the U.S. financial system, and he pledged to work on improving the regulatory structure in order to prevent another similar situation.

I share the anger and frustration of the American people, not just about the compensation practices at AIG and in other parts of our financial system, but that our system permitted a scale of risk-taking that has caused grave damage to the fortunes of all Americans, Geithner said.

Bernanke added that the bonuses paid to employees of AIG were highly inappropriate. At the same time, Bernanke outlined the reasoning behind the government's repeated interventions to prop up AIG despite severe mismanagement within the embattled insurance giant. The Fed Chairman noted that AIG must scrupulously avoid any excessive and unwarranted compensation.

We have pressed AIG to ensure that all compensation decisions are covered by robust corporate governance, including internal review, review by the Compensation Committee of the Board of Directors, and consultations with outside experts, Bernanke said.

However, the attacks on AIG have pushed other financial groups to work to return government funds as soon as possible. According to the Wall Street Journal, Goldman Sachs (GS) may sell its stake in the Industrial and Commercial Bank of China to help it repay the $10 billion it received under the TARP.

The major averages pulled back to new lows for the session in late-day trading, although they ended the session just off their worst levels. The Dow closed down 115.65 points or 1.5 percent at 7,660.21, the Nasdaq closed down 37.34 points or 2.4 percent at 1,518.43 and the S&P 500 closed down 16.58 points or 2 percent at 806.34.

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