KUALA LUMPUR (Jan 13): The FBM KLCI erased earlier losses for a 13.82-point or 0.8% gain after a proposed mega banking merger was widely reported to  have been called off.

Fund managers said banking stocks were in the spotlight following news that the merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysian Building Sociey Bhd was off.

The KLCI closed at 1,748.90 points on gains in CIMB, RHB Capital and Malayan Banking Bhd. The KLCI had earlier fallen to an intraday low of 1725.98 points

A fund manager told theedgemarkets.com buyers of banking stocks comprised retail and institutional investors.

"I think investors want to take advantage of the (merger) cancellation, since the valuation (of the stocks) might be better if the deal is called off.

"Other than that, I don't think much has changed. There is still a lot of uncertainty in the market, and a lot of people are staying on the sidelines, until we get a clearer picture of what is going to happen," he said.

Across Bursa Malaysia, 1.91 billion shares were traded for a total value of RM2.12 billion.

The were 313 decliners and 502 gainers while 275 counters remained unchanged.

The top gainers included CIMB, Malaysia Airports Holdings Bhd and Amway (Malaysia) Holdings Bhd.

Leading decliners included Kuala Lumpur Kepong Bhd, Hong Leong Capital Bhd, Tasek Corp Bhd and Time Dotcom Bhd.

The most-active counter was Systech Bhd with some 63 million shares done.

The weakening ringgit was also in the spotlight. At the time of writing, the ringgit was at 3.5953 versus the US dollar.

Compared to the Singapore dollar, the ringgit changed hands 2.6905

Across the region, Hong Kong's Hang Seng closed 0.79% higher while South Korea's Kospi ended 0.2% down. Japan's Nikkei 225 fell 0.64%.

Falling crude oil prices were in focus. Earlier, Bloomberg reported oil had extended losses to trade near US$45 a barrel amid speculation that U.S. crude stockpiles will increase, exacerbating a global supply glut that’s driven prices to the lowest in more than 5-1/2 years.