Thursday, 03 January 2013 13:14
MELBOURNE: Australian shares rose 0.7 percent to reach their highest close in more than 19 months on Thursday as investors snapped up exporters such as miners on encouraging news from the world's two biggest economies.
Data showing growth in China's services sector accelerated at its fastest pace in four months reinforced the spike in world stocks and commodity prices which followed news that the US avoided a "fiscal cliff" budget crunch..
Miners gained, with iron ore producer Fortescue Metals rising 2.4 percent to A$5.04, its best close in six months.
"Investors have embraced companies or industry sectors that are more dependent on economic growth like retailers, miners and energy producers," said Craig James, economist at broker CommSec.
"A stronger global economy means increased demand for raw materials, potentially lifting raw material prices," he said.
The benchmark S&P/ASX 200 index rose 35 points to 4,740.7, according to the latest data, its highest since May 19, 2011. Wednesday's 1.2 percent gain was the biggest one-day rise in five months.
New Zealand's benchmark NZX 50 index rose 0.4 percent to 4,082.4 as trade resumed on Thursday after holidays.
BHP Billiton added 0.8 percent to A$38.15, while Rio Tinto notched up 2.4 percent to A$69.25.
Both miners were at their strongest since February on higher iron ore prices and relief over the US budget agreement.
"Universally this has been regarded as a good thing, with investors scrambling to get back into risky financial assets like shares and commodities in preference to safe-haven assets like bonds," said James. "Hopefully, now confidence can recover."
Mirabela Nickel Ltd rallied 8.6 percent to A$0.57 after Moody's Investors Service lifted its outlook to stable from negative, saying the change reflected Mirabela's improved liquidity. The stock had traded below A$0.30 last year.
Insurance Australia Group Ltd rose 0.6 percent to A$4.72 after it said its 2013 group catastrophe reinsurance programme provides protection of up to A$5 billion, compared to A$4.7 billion in 2012.
Department store Myer ended unchanged at A$2.21. A spokesman said the company continued to expect flat sales for Christmas and January from a year earlier.
"We have been saying that Christmas and stocktake (sales) combined will be flat and we maintain that view," the spokesman said.
Center>Copyright Reuters, 2013