Singapore shares rose nearly 1 percent by midday to a three-week high, led by rigbuilder Sembcorp Marine Ltd after it won a drillship contract worth more than $800 million.
Shares were also buoyed by optimistic comments from a senior U.S. lawmaker on the country reaching a budget deal before the year-end that would ease the fiscal crisis.
The Straits Times Index climbed 0.9 percent to 3,040.43 points, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 1 percent.
Sembcorp Marine rose 4.1 percent to S$4.56 after it said it had won its seventh drillship contract worth $806.4 million from Sete Brasil Participaces S.A.
"We believe delays faced by Brazilian yard, EAS, could lead to more rig contracts for Sembmarine from now till 2013, as a stop-gap measure by Petrobras," said CIMB Research in a note.
Commodity companies Golden Agri-Resources and Olam International were the strongest gainers on the index, with the former rising 4.7 percent to S$0.665.
Olam climbed 4 percent to S$1.56 after it put up a detailed defence against short-seller Muddy Waters' allegations questioning the company's accounting practices and acquisitions.
1321 (0521 GMT)
(Reporting by Charmian Kok in Singapore; Editing by Prateek Chatterjee; firstname.lastname@example.org)
9:51 STOCKS NEWS SINGAPORE-Olam rises, off 3-1/2 year low
Shares of Singapore's Olam International Ltd rose 3 percent, after hitting a three-and-a-half year low on Wednesday, as analysts said the commodity trader's detailed defence against allegations from short-seller Muddy Waters was largely satisfactory.
By 0134 GMT, Olam shares were 2.7 percent up at S$1.54, but have lost 27.7 percent since the start of the year, compared with the Straits Times Index's 14.4 percent rise.
"In our view, the explanations were satisfactory and should clear any misunderstanding caused by Muddy Waters' accusations," said CIMB Research, which upgraded Olam to 'neutral' from 'trading sell' and kept its S$1.59 target price.
CIMB believes the worst of the clash with Muddy Waters is over and Olam's share price should find support at book value of S$1.35. However, it warned that sentiment could remain subdued as investors continue to remain cautious.
Citigroup was positive on Olam's indication that it may consider reducing its expansion pace as investors signalled that greater execution focus and reduced leverage were important, given a tough macro environment.
OCBC Investment Research also believed investors are likely to adopt a cautious approach to valuing Olam. It now values the company at 10 times 2013 earnings per share versus 12.5 times previously, lowering its target price to S$1.44 from S$1.80.