Philippine shares rallied for the second time on Tuesday as investors remain optimistic about the prospects of local economy, analysts said.

The bellwether Philippine Stock Exchange index gained 0.57 percent or 25.14 points to 4,422.22, while the broader all-share index rose by 0.55 percent or 17.09 points to 3,081.96.

Trading volume reached 3.62 billion shares worth 4.87 billion pesos (111.28 million U.S. dollars) with 99 stocks advancing, 69 declining and 41 were unchanged.

All six counters closed higher, led by the mining and oil sector which jumped by 2.25 percent.

DBP-Daiwa Securities, Inc. said in its daily stock market report that amid the negative sentiments in the global markets, investors remained cautiously optimistic on the Philippine market with its solid domestic economy amid the expected global economic slowdown.

"The Philippine government has signaled that it has started moving to release funds for infrastructure projects in order to ensure they start early this year, in contrast to 2011 when lower- than-programmed state spending stifled economic growth," it said.

The Philippine government is aiming to issue within the month allotment for 141.79 billion peso (3.27 billion U.S. dollars) infrastructure spending under this year's 1.816-trillion-peso (42 billion U.S. dollars) national budget.

Following the news, stocks which are deemed to benefit from the government's projects were picked up.

Among these include DMCI Holdings, Inc. which rose by 0.47 percent and Metro Pacific Investments Corp., which was up by 1.37 percent.

"(Also), the Philippine market is only one of the few that were able to post gains in 2011 despite the rough global financial markets," DBP-Daiwa Securities added.

For 2011, average daily value turnover has increased by 20 percent year-on-year, which the brokerage said signifies strong interest in the Philippine market amid the global financial condition.

Analyst Justino Calaycay of Accord Capital Equities Corp. said the positive performance of the Asian equities also helped investors decide to remain in the equities.

On Tuesday, neighboring stock markets also traded positively.

But the analyst warned that the Philippine stock market will find it more challenging to raise optimism higher given the still shaky situation in Europe, even as the U.S. economic recovery appears to have gained traction through the holiday season.

Stocks in the 30-company index were mostly up. Alliance Global Group, Inc., heavyweight Philippine Long Distance Telephone Co., and Ayala Corp. gained.