KUALA LUMPUR: Bursa Malaysia bucked a mainly positive regional trend at the close on Thursday, dipping slightly into the red and erasing earlier gains on late selling in selected counters, led by financial stocks.

At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) erased 1.49 points, or 0.09 per cent, to 1,638.31 from yesterday's close of 1,639.80. The FBM KLCI had opened 4.24 points firmer at 1,644.04 and moved between 1,637.91 and 1,649.87 throughout the day.

Gainers led decliners in the broader market 669 to 353, while 442 counters were unchanged, 1,002 untraded and 26 suspended.

Turnover fell to 2.61 billion units worth RM2.94 billion from yesterday's 2.96 billion units worth RM3.33 billion.

UOB Kay Hian Wealth Advisors head of investment research Mohd Sedek Jantan said the financial sector led the decline on the local bourse, driven by concerns that arose from the latest US inflation report.

"The anticipated US interest rate cut has introduced a new layer of uncertainty for Malaysian banking stocks, particularly around a potential narrowing of interest margins. This could negatively impact banks' profitability, leading to lower earnings, reduced dividends, and weaker financial positions.

"However, we view this as a short term 'red flag' as it is important to note that Malaysian banks have been actively diversifying their revenue streams to mitigate these risks," he told Bernama.

Global market sentiment improved after inflation in the United States moderated to 2.5 per cent in August from 2.9 per cent in July, spurring a rally overnight on Wall Street, driven by Nvidia and other technology stocks.  However, the rally failed to translate into broader gains, with defensive stocks experiencing declines.

"A similar trend was observed in the FBM KLCI, with the utility, banking, and plantation sectors closing the day in the red," he added.

Mohd Sedek said he expected the current downtrend to be temporary with the anticipated US rate cut next week acting as a fresh catalyst, particularly benefiting Malaysia's small-cap index, which rebounded today after reaching a six-month low.

Regionally, Japan's Nikkei 225 rallied 3.41 per cent to 36,833.27, Hong Kong's Hang Seng Index added 0.77 per cent to 17,240.39 and South Korea's Kospi bounced 2.34 per cent to 2,572.0. Singapore's Strait Times was 0.69 per cent higher at 3,555.40. 

On Bursa Malaysia among the heavyweight counters, Public Bank lost five sen to RM4.65, IHH Healthcare dropped 10 sen to RM6.65 and CIMB lost seven sen to RM8.20. Hong Leong Bank slid 30 sen to RM21.20.

Globetronics was the most active of stocks, erasing two sen to 55 sen while Alpha IVF was half-a-sen better at 35 sen and MYEG fell 1.5 sen to 89.5 sen. OCR added one sen to six sen and YTL was seven sen better at RM2.47.

The top gainers were led by Malaysian Pacific Industries, which jumped 54 sen to RM27.36 while United Plantations bounced 48 sen to RM27.50 and Vitrox was 25 sen higher at RM3.35. Ajinomoto advanced 24 sen to RM14.94.