* Benchmark index up 0.55 percent
* Regional markets weighed down by China's fuel price hike
* Mencast Holdings up after fundraising
By Mark Tay
SINGAPORE, March 20 (Reuters) - Singapore shares were up at midday on Tuesday after positive U.S. homebuilder sentiment data but gains were capped as China said it would raise fuel prices by between 6 and 7 percent.
Regional markets were dragged down by losses in Hong Kong and Shanghai as investors fear rising fuel costs could hurt profits of industrial users and logistics firms.
By 1:00 p.m.(0500 GMT), Singapore's benchmark Straits Times Index (STI) was up 0.55 percent or 16.39 points at 3,006.48. Around 533.7 million shares worth S$456.3 million ($363 million) were traded.
IG Markets' head of research Justin Harper said the market's support and resistance levels were at 3,000 and 3,030 points respectively and he expected those to remain until Friday.
"There is still strong bullish sentiment coming from the U.S. market and a much stronger risk-on sentiment across the region. The STI is holding on to that today but the China factor is again quelling the markets," Harper said.
"There is still a focus on the cyclicals and the big heavyweights from people who are getting back into the market. As volume picks up, that's when you will see people picking more stocks further down the value chain."
Harper said no particular sector led the index's rise on Tuesday.
Shares of Mencast Holdings Ltd rose as much as 8 percent in strong volume after the Singapore sterngear equipment manufacturer and supplier said it would raise S$11.9 million from investors including state investment giant Temasek Holdings.
Singapore-listed STX OSV Holdings Ltd also rose as much as 2.8 percent after it won two contracts worth about 1.15 billion Norwegian crowns ($201 million) to build subsea vessels. ($1 = 5.7180 Norwegian krones) ($1 = 1.2566 Singapore dollars) (Reporting By Mark Tay)