Markets

Australia shares rebound; CSL up on Swiss franc peg

MELBOURNE : Australian stocks jumped 1.9 percent on Wednesday morning, bouncing off a one-month low, as investors snatch

Published September 7, 2011 Updated September 7, 2011 04:29am

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By Shoaib Ur Rehman

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A rally in resources stocks in London spurred buying in mining and energy stocks locally, sending BHP Billiton up 2.9 percent and Rio Tinto up 2.1 percent, which helped snap the market's three-day losing streak.

"The falls over the last couple of days have been a bit overdone," said Phillip Weinberg, a dealer at Karara Capital.

Australia's second-quarter GDP growth turned out to be stronger than expected, helping to underpin the market's rebound.

The economy grew 1.2 last quarter as households spent much more than expected and miners rebuilt stocks after floods.

Karara's Weinberg said the 100-point drop in the Dow Jones industrial average overnight was largely a catch-up with global markets following a long weekend in the United States.

"We were expecting worse," he said.

World no.2 blood products maker CSL was one of the top 10 gainers, jumping 3.8 percent, after Switzerland moved to cap a soaring Swiss franc, pegging it to the euro.

CSL's earnings are heavily exposed to the strong Swiss franc and weak US dollar, as its offshore business is based in Switzerland and sells more than half its key product to the United States.

The benchmark S&P/ASX 200 climbed 76.8 points to 4,152.3 as of 0118 GMT, reversing all of Tuesday's loss.

New Zealand's benchmark NZX 50 index rose 0.6 percent to 3,289.4.

Investment bank Macquarie Group inched up 2 cents to A$23.18 after sticking to its outlook for a higher profit in the year to March 2012 while trimming its outlook for key divisions, including trading and investment banking.

Australia's four big banks all rose more than 2 percent, led by National Australia Bank , which jumped 2.9 percent in light trading.

Gold miners, which led the market over the past two days, slipped on Wednesday, after gold prices retreated off a record high of $1,920 an ounce.

Rare earths explorer Northern Minerals jumped 3.8 percent to A$0.68 after saying it was increasingly confident in the high quality of its Browns Range rare earths project.

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