PHILIPPINE stocks rose to the highest in more than a decade after the country’s investment rating was raised by advisers to the California Public Employees Retirement System (Calpers), the largest US pension fund.

“This will draw more funds into the market,” said Jerome Gonzalez, who helps manage $52 million at Manila-based PhilEquity Management Inc. “Calpers is a big fund and fund managers follow each other like a herd.”

Stocks also got after the US Federal Reserve chairman damped speculation that US interest rates will rise.

Ayala Corp. and Ayala Land Inc. advanced on expectations the higher rating and steady interest rates in the US will boost demand for the nation’s shares. Megaworld Corp. climbed after its share-price target was raised 27 percent by UBS AG.

The Philippine Stock Exchange index jumped 78.43, or 2.4 percent, to 3379.37 at the close, its highest close since February 10, 1997. It’s the measure’s biggest advance since October 5. Banco de Oro, Equitable PCI Bank and 30 other stocks climbed Thursday to their highest in at least 52 weeks.

The main stock measure is less than a hundred points from its record close of 3447.60, a level it reached on February 3, 1997. Some analysts and fund managers expect the index to climb to 3,500 this year.

Wilshire Associates Inc. raised its ratings for the Philippines, the government said Wednesday after trading closed. The nation’s rating improved to 2.3 out of a possible 3, higher than last year’s 2.1, the government said.

Ayala, Megaworld

WILSHIRE advises Calpers on emerging markets it may invest in based on criteria including political stability, market liquidity and volatility and investor protection provided by regulators and legal systems. Calpers had assets of $223.5 billion as of October.

Ayala Corp., the nation’s third-largest company by market value, advanced P20, or 3.1 percent, to P660. Ayala Land, the most profitable builder, added 50 centavos, or 3 percent, to P17.25. SM Prime Holdings Inc., the nation’s largest shopping mall operator, gained 50 centavos, or 4.2 percent, to P12.50, after climbing Thursday to its highest ever.

Federal Reserve chairman Ben S. Bernanke, in testimony before Congress, said inflation may be slowing and suggested he isn’t in a hurry to either raise or cut interest rates. Higher US interest rates will make riskier investments like emerging markets, including the Philippines, less appealing.

“Bernanke’s statement supports the outlook of a low interest rate environment,” said Jan Bertulfo, who helps manage about $1 billion at Rizal Commercial Banking Corp. in Manila. “Investors have again found the appetite for equities.”

Megaworld gains

MEGAWORLD, a builder of office and residential towers, gained 25 centavos, or 8.6 percent, to P3.15, its highest since March 18, 1997. Higher earnings may lift the stock to P3.80 a share in the next 12 months, compared with a January forecast of P3, Jody Santiago, research head at the Manila unit of UBS, said Wednesday.

Philippine Long Distance Telephone Co., the nation’s largest company by market value, gained P55, or 2.1 percent, to P2620, an 11-day high. The company said Thursday that Capital Research & Management Co. bought shares. Separately, the government said Thursday it signed an agreement to sell its 6.4-percent stake in the phone company for P25.2 billion to Hong Kong’s First Pacific Co.

DMCI Holdings

DMCI Holdings Inc., the nation’s largest construction company by market value, rose 40 centavos, or 5.6 percent, to P7.60, its biggest gain in more than two weeks, after a newspaper reported two overseas investors plan to buy a stake in its water unit.

Deutsche Bank AG and Singapore’s Noonday Asset Management Group plan to buy France’s Lyonnaise Asia Water (Holdings) Pty’s 16 percent stake in Maynilad Water Services Inc., the newspaper reported, citing a company official it didn’t identify.

Metro Pacific Investments Corp., DMCI’s partner in a venture that holds 84 percent of Maynilad Water, added 30 centavos, or 6.3 percent, to P5.10, its biggest jump in nine days.

Filinvest Land Inc. rose for a second day, climbing 2 centavos, or 1.2 percent, to P1.72 after the largest Philippine builder of low-cost homes said it had paid tax on land acquired three years ago, rejecting government claims of a shortfall in payments.

Filinvest Development Corp., which owns Filinvest Land, gained 10 centavos, or 2 percent, to P5.10, extending a 2-percent climb Wendesday.

Banco de Oro, Equitable

BANCO de Oro, a lender owned by the nation’s richest tycoon Henry Sy, gained for the sixth-day, climbing P2.50, or 4.1 percent, to P64, its highest ever. The stock has risen 20 percent since Macquarie Securities Ltd. raised Banco de Oro’s 12-month share-price target by 44 percent to P78 on expectations of stronger loan-growth prospects and benefits from a merger with Equitable PCI Bank.

Equitable PCI Bank, the nation’s third-largest lender by asset, advanced P9, or 8.3 percent, to P118, rounding a six-day, 23 percent gain. The stock closed at its highest ever.

“Expect shares of Equitable to go up each time Banco de Oro climbs until their combination is completed,” said Gilbert Lopez, analyst at Macquarie Securities’ Manila-unit. Under their planned merger, Banco de Oro will swap 1.8 of its shares for every share of Equitable.

JG Summit

JG Summit Holdings Inc. advanced 25 centavos, or 2.1 percent, to P12.25, a 10-day high, after its property and food units, Robinsons Land Corp. and Universal Robina Corp., reported higher earnings.

Robinsons Land, the nation’s second-largest shopping mall builder, rose P1, or 5.3 percent, to P19.75, bringing its four-day gain to 11 percent. The builder had a 45 percent increase in profit to P605.9 million in its first quarter ended December 31 as sales rose.

Universal Robina, the largest Philippine snack-food manufacturer, advanced 50 centavos, or 2.8 percent, to P18.50, bringing this week’s gain to 10 percent. The company said profit rose almost fivefold to P3.6 billion in its first quarter ended December 31, boosted by a P2.9 billion gain from the sale of its shares in Robinsons Land.

“The earnings coming out are helping make equities look more appealing than fixed-income assets,” Bertulfo said. “There’s plenty of liquidity going into stocks.”

Shares worth P5.76 billion were traded, 81 percent more than the six-month daily average. Gainers beat losers 107 to 24, with 50 unchanged. The ratio of gainers over losers is the biggest since October 19.

The following stocks either rose or fell. Stock symbols are in brackets after company names:

Jollibee Foods Corp. (JFC PM), the nation’s largest fast-food company, rose P3.50, or 7.9 percent, to P48, its biggest gain since November 2, 2005. Jollibee said Wednesday after trading closed that net income rose 28 percent to P650.7 million in the three months ended December 31 as a stronger peso capped expenses.

Philippine National Bank (PNB PM), a lender controlled by the nation’s second-richest man Lucio Tan, gained P4, or 8.2 percent, to P53, its biggest climb since November 9. The lender said Wednesday after trading closed that profit rose 30 percent to P810 million on higher lending, trading and fees.

MacroAsia Corp. (MAC PM), a provider of in-flight catering services with interests in mining, declined 10 centavos, or 3.6 percent, to P2.65, ending a three-day 29 percent advance. The company said Thursday that talks with Canada’s Chemical Vapour Metal Refining Inc. to buy nickel ore from the Philippine miner have stalled since the two meetings they held in 2006.

Manila Water Co. (MWC PM), which services the eastern half of the Philippine capital, rose 10 centavos, or 1 percent, to P9.80. The company said its directors in a meeting Thursday approved to raise dividend payments to 30 centavos a share from 21 centavos previously.

SMART Communications Inc., the biggest mobile-phone company in the Philippines, raised P5 billion through its fixed-rate corporate note issue with five- and 10-year tenors to fund its network expansion.

PHILIPPINE stocks rose to the highest in more than a decade after the country’s investment rating was raised by advisers to the California Public Employees Retirement System (Calpers), the largest US pension fund.

THE board of directors of Manila Water Co., Inc. (MWCI) approved on Thursday an increase in the company’s dividend payout ratio to 30 percent from only 25 percent in previous years.

CONVERGYS Corp. announced Thursday it will possibly build another site in Bacolod either in the last quarter of the year or in the first quarter of 2008 as part of its expansion in the Philippines.

Although they have the biggest stake in Al-Almanah Bank, the country’s only bank that practices the Muslim’s sharia law of not charging interest for loans extended, Development Bank of the Philippines and Social Security System have only one representative each in the board.