Australian shares gain

Australian stocks rose 0.3 percent on Monday, finishing off session highs as banks gave up early gains in low volume trade ahead of the first budget from Australia's minority government, due on Tuesday. Investors said the market was struggling to forge ahead after indications from Australian policy makers that interest rates may rise in coming months.
That was keeping investors cautious, particularly toward industrial stocks, and producing selling into any rallies, investors said. "The budget will be delivered during the week. They are talking about cutting spending, people would like to know how they are going to do that. The Reserve Bank talks about increasing interest rates, therefore both seem to be on a tightening bias," said Alleron Investment Management chief investment officer Albert Hung.
"This wouldn't be a very good backdrop for industrial stocks. These are the worries overhanging (investors)," he said. The benchmark S&P/ASX 200 index rose 13.8 points to 4,756.8, according to the latest data. It slipped 0.2 percent on Friday. New Zealand's benchmark NZX 50 index gained 0.4 percent to 3,518.98. Australia's central bank on Friday warned a further rise in interest rates will be needed at some point in order to keep inflation contained amid the biggest mining boom in over a century.
"The prospect of interest rate increases is keeping buyers in check. This together with the strong Australian dollar will be a constraining influence on profit growth for many domestically focused Australian companies," said Ric Spooner, analyst at CMC Markets.
Top banks all gained but ended well off session highs, with Commonwealth Bank finishing up just 2 cents at A$52.65, off an earlier peak of A$53.18. Cleaning company Spotless Group rose 13 percent to A$2.20 on more than six times its usual volume after a conditional A$657 million bid from a private equity firm of A$2.50 a share, which it rejected.
Mineral Resources rallied 8 percent to A$12.15 after it announced an export agreement with Fremantle Port Authority for its Carina iron ore project. Atlas Iron rose 3.9 percent to A$3.48 after Macquarie Equities analysts upgraded it to "outperform" after a presentation by the company.