SYDNEY: Australian share prices closed 1.40 percent higher Wednesday after markets in the United States staged a dramatic rebound overnight on reports EU officials are examining ways to help vulnerable banks.
The benchmark S&P/ASX 200 closed in positive territory for the first time this week, ending up 54.3 points at 3,926.4.
But IG Markets analyst Cameron Peacock said the market's inability to cling to early gains -- when it rallied to 3,951 -- suggested investors remained sceptical of the latest proposals to resolve the European debt crisis.
"Until these policy makers take decisive action to resolve the many issues plaguing the European and US economies, as opposed to political posturing, equity markets are merely a sideshow," he said.
CommSec chief equities economist Craig James said despite the rise there was "still a fair amount of caution".
"What we're seeing right across the globe, wherever there are profits to be made, those profits are quickly taken," he said.
Gains in resources and banking stocks saw heavyweight miner Rio Tinto jump 2.2 percent while major banks NAB and Westpac were also higher -- up 1.49 percent and 2.43 percent respectively.
Data released Wednesday that showed retail spending grew by a stronger-than-expected 0.6 percent in August, helped the local currency.
The Aussie was trading at 95.42 US cents late Wednesday, up from 95 US cents from the previous day.
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