Stocks snapped a two-day rally on Friday as investors took their cue from Wall Street's sharp losses overnight due to renewed worries about the health of the US economy.
US stocks fell roughly 2.0 percent, led by the property and financial sectors, after a 2.6-percent decline in existing home sales for June, well below the 1.0-percent forecast of economists.
Investors took recent disappointing news in the US as an excuse to lock in profits following two sessions of gains owing to declining oil prices.
"We were just tracking the performance of Wall Street. Investors are always watching developments in the United States," said Joseph Roxas, president of Eagle Equities.
The Philippine Stock Exchange composite index fell 23.19 points or 0.91 percent to 2,512.72.
The broader all-share index lost 13.40 or 0.84 percent at 1,580.89.
Losers beat gainers, 58 to 40. There were 48 stocks unchanged.
A total of 1.37 billion shares worth P1.9 billion were traded.
"Today's decline was partly because of the Dow Jones and partly technical, given that we were rallying in the past days. Traders again locked in gains," said Claire Quiray of Accord Capital Equities Corp.
Quiray said investors were still trading cautiously due to the volatility in oil prices.
Crude oil prices shot to record highs earlier this year because of political tensions in oil producing countries in the Middle East. Prices started to come down from above $147 a barrel on expectations of a slowdown in global demand.
"But apparently the drop in oil cannot be fully sustained," Quiray noted.
On Thursday, light, sweet crude rebounded by $1.05 to settle at $125.49 per barrel on the New York Mercantile Exchange.
Investors also kept an eye on local imports data.
The government announced that imports in May rose 11.3 percent as high fuel and rice purchases overshadowed a 14.4 percent annual drop in electronics imports, which signals weaker export growth ahead. Shipments of electronics parts dominate imports and are used as inputs for the country's key semiconductor exports.
The country had a trade deficit of $559 million for May and a deficit of $3.16 billion for the first five months of the year, compared to a shortfall of $347 million in January to May 2007.
