The composite index closed up 35.18 points or 1.53 percent at 2,340.82, just off its day-high of 2,341.65, and its loftiest since August 5, 1999 when it settled at 2,348.24. It hit a low of 2,305.64.
The all-shares index rose 19.82 points to 1,451.46.
Gainers outpaced losers 85 to 21, and 41 stocks were unchanged.
Volume reached 3.93 billion shares worth 2.5 billion pesos.
"Our market is going from one strength to the next," said Lawrence de Leon, an analyst at Accord Capital Equities Inc. "Obviously, this upward pressure is a combination of both strong earnings expectations and the country's improving fiscal outlook."
Finance Secretary Margarito Teves on Tuesday said Moody's Investors Service may lift its negative outlook for the Philippines' credit ratings if the government meets its fiscal targets.
Of the three major international credit rating agencies, only Moody's has a negative outlook on the country's sovereign ratings.
"We consider Moody's behind the curve. Fiscal consolidation is the basis of our view that the Philippines, like Korea, is a re-rating story," said Tim Condon, managing director of research in Asia at ING Asset Management in Singapore.
Among the day's winners were Ayala Land Inc. which jumped 0.75 pesos or 6 percent to 13.25 on volume of 11.85 million shares while most active Bank of the Philippine Islands advanced 0.50 to 62.50 on 5.81 million shares.
Their parent Ayala Corp. rose 12.50 to 382.50.
Philippine Long Distance Telephone Co. gained 5.00 to 2,045 while rival Globe Telecom Inc. advanced 25 to 960. Both telecom firms will report their quarterly earnings next week.
Conglomerate SM Investments Corp. rose 5.00 to 230, while unit SM Prime Holdings Inc. gained 0.10 to 8.10.
Union Bank of the Philippines added 1.00 to close at 41.50, and International Exchange Bank fell 1.50 to 37.50 after the Philippine Daily Inquirer newspaper reported that UnionBank is planning to buy iBank.
In response, iBank said it had not received any purchase offer from UnionBank, while the latter said it had not entered into any acquisition deal with any lender.
San Miguel's A-shares, which only Filipinos can buy, finished flat at 64 while its B-shares, open to foreign investors, was also unchanged at 81.
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