The Straits Times Index was up 1.96 points at 2,347.34. Volume was 609 million shares worth 616 million Singapore dollars (317 million US).
Gainers outpaced losers 263 to 212 with 663 shares unchanged.
Citigroup Smith Barney said talk of the Singapore Airlines divestment is symbolic of further corporate restructuring initiatives to be expected next year, which may result in special dividend pay outs.
"Singapore Airlines' potential restructuring underscores one of the key themes in the Singapore market which we expect to play out in 2006," the brokerage said.
SIA rose 0.40 to 12.40 dollars while its subsidiaries SIA Engineering and Singapore Airport Terminal Services (SATS) were up in response to Minister Mentor Lee Kuan Yew's renewed call for the airline to sell its subsidiaries.
SIA Engineering was up 0.12 to 2.72 while SATS added 0.04 to 2.38. ST Engineering rose 0.05 to close at 2.86, a 52-week high after the firm said it will consider buying Singapore Airlines' stake in SIA Engineering if the airline decides to sell.
Among other blue chips, Singapore Telecommunication was flat at 2.61 while Singapore Press Holdings dropped 0.06 to 4.30.
Technology stocks closed mixed with Venture up 0.10 at 13.80, while Chartered Semiconductor fell 0.01 to 1.30 and STATS ChipPAC lost 0.02 to 1.11. Creative Technology was steady at 13.60.
The property sector was quiet with Keppel Land rising 0.02 to 3.66.