5:54 pm - Malaysian shares close higher on election hopes;

Malaysian shares close higher on election hopes; KLCI at fresh high - UPDATE (Adding analyst comment, share prices) - KUALA LUMPUR (Thomson Financial) - Malaysian shares closed sharply higher Friday, with the benchmark index finishing at a fresh record for a fifth consecutive session, on growing hopes that state-linked funds will support the stock market ahead of an election in a bid to boost confidence. The government may call a general election soon after the governing Barisan Nasional coalition finishes gauging the readiness of its member-parties' election machinery, according to a local media report. The Kuala Lumpur Composite Index (KLCI) finished up 24.56 points or 1.7 percent at 1,516.22, off an all-time intraday high of 1,521.56. For the week, the index was up 49.55 points or 3.4 percent. The FTSE Bursa Malaysia 30-large cap index rose 181.24 points or 1.9 percent to 9,878.48, but the FTSE Bursa Malaysia second board index was down 26.31 points or 0.4 percent at 6,926.33. Advancers led decliners 461 to 415, with 247 stocks unchanged and 226 counters untraded. Trading volume was 1.76 billion shares, valued at 4.36 billion ringgit. "With the local media reporting further confirmation of a snap general election just weeks away, a pre-election rally looks set to draw in more investors and retail participation should increase significantly," said Stephen Soo, a TA Securities analyst. Buyers were further encouraged by Wall Street's solid performance overnight after Federal Reserve chairman Ben Bernanke hinted at further interest rate cuts, said Lim Chee Sing, managing director of RHB Research Institute. Looking ahead to next week's trading, analysts said the local market is likely to rise further. "What started as an almost exclusive plantation sector-led rally in December has, over the last two trading days, broadened into many large caps, mid caps and thematically, political plays which also favor small caps," said Vincent Khoo, head of research at Aseambankers Investment Bank. The key index's current valuation looks fair and appears to have more room for upside given a solid outlook for corporate earnings, said Lim at RHB. "We expect sentiment to remain positive until next month, after that, it will still hinge on the situation in the US," he said. Banks, builders and palm oil companies led Friday's advance. Maybank, Malaysia's largest bank, closed up 30 sen or 2.4 percent at 12.80 ringgit and Bumiputra-Commerce, which controls CIMB Bank, the second largest in Malaysia, surged 70 sen or 6.4 percent to 11.70 ringgit. Khazanah Nasional, the investment arm of the Ministry of Finance, is a key shareholder of Bumiputra-Commerce. Construction and property group UEM World, another unit of Khazanah, advanced 6 sen or 1.4 percent to 4.40 ringgit. The stock has gained 14 percent over the past two weeks. Malaysian Resources Corp Bhd (MRCB) rallied 18 sen or 6.3 percent to 3.04 ringgit on talk that the state-linked builder may have won a multi-billion-ringgit contract to build a monorail system in the northern state of Penang. MRCB shares have gained more than 12 percent so far this year. Palm oil stocks were higher after crude palm oil (CPO) futures on the Malaysian derivatives exchange reached a fresh record on supply concerns. The three-month CPO contract for March delivery was last at 3,275 ringgit per metric ton. Sime Darby, a state-owned plantation giant, climbed 50 sen or 3.9 percent to 13.30 ringgit. IOI Corp, the second largest palm oil stock on the local bourse, gained 5 sen or 0.6 percent at 8.40 ringgit and mid-sized United Plantations advanced 40 sen or 2.9 percent to 14.20 ringgit. At the close, the Malaysian ringgit was quoted at 3.2570/2600 against the US dollar. The three-month interbank rates were quoted at 3.55/58 and the overnight rates were at 3.49/52. aipeng.soo@thomson.com