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PERTH - The Australian share market closed in positive territory but pulled back from earlier highs of almost 5 per cent.
Gains on the local market followed a Wall Street rally triggered by expectations the US Federal Reserve would cut interest rates tonight (Australian time) in an effort
to revive a spluttering American economy.
The benchmark S&P/ASX200 index was up 51 points, or 1.34 per cent, at 3,845.6, while the broader All Ordinaries index gained 50.4 points, up also 1.34 per cent, to 3,805.8.
On the Sydney Futures Exchange at 1616 AEDT, the December share price index futures contract was up 15 points at 3,817 on a volume of 39,196 contracts.
The local bourse was up almost five per cent in intraday trade but pulled back significantly towards the end of trade, traders said.
IG Markets research analyst Ben Potter said the materials, energy and financials sectors drove the local market higher today.
"Offshore gains were powered by the easing of credit spreads and the return of bargain-hunters as valuations reached their cheapest level in 23 years," Mr Potter said.
"Despite the strength seen overseas, the (local) market has drifted lower all day.
"This is a classic example of the market selling into strength.
"Rallies at the moment are purely seen as an opportunity to sell at higher prices and today there were plenty of buyers."
Stronger base metals overnight propelled the mining giants higher.
BHP Billiton was up 94 cents, or 3.71 per cent, to $26.30 after announcing it will close its operations in Suriname by 2010 because it anticipates having exhausted all of its mines in the South American nation by then.
Rival and takeover target Rio Tinto said it would spend US$228 million (A$357.9 million) to upgrade its Shipshaw power station in Canada, a major component of Rio Tinto Alcan's extensive hydroelectric network.
Its shares were up $2.53, or 3.71 per cent, at $70.78.
Making headlines today, St George Bank reported a record cash profit in its last earnings statement before being taken over by Westpac.
St George shares fell 52 cents, or 1.94 per cent, to $26.30 and Westpac was down 24 cents, or 1.17 per cent, to $20.26.
Among the other banks, National Australia Bank gained 16 cents to $23.06, ANZ was 31 cents, or 1.83 per cent, higher at $17.24 and Commonwealth Bank was 92 cents, or 2.34 per cent, higher to $40.30.
In other news, beverage company Foster's Group has delayed the planned completion of a review of its struggling wine assets by two and a half months.
Shares in Foster's advanced 34 cents, or 6.69 per cent, to $5.42.
Qantas shares added six cents, or 2.48 per cent, to $2.48 after outgoing Qantas chief executive Geoff Dixon said the airline was well placed to weather the global financial crisis.
Despite the oil price hovering near 17-month lows, local energy stocks were stronger.
Woodside rose $1.15, or 3.1 per cent, to $38.25, Oil Search soared 31 cents, or 9.12 per cent, to $3.71 and Santos leapt $1.05, or 9.01 per cent, to $12.70.
At 1628 AEDT, spot gold was trading in Sydney at US$741.35 an ounce, down 25 US cents on yesterday's close of US$741.60.
Among gold miners, Newmont soared 43 cents, or 12.54 per cent, to $3.86, Lihir Gold gained 6.5 cents to $1.72 and Newcrest was up 99 cents, or 5.59 per cent, at $18.70.
Among media stocks, Fairfax shares advanced seven cents to $1.94 after saying it has extended the debt maturity profile of a bank facility by three years to reduce its 2010 refinancing risk.
The retailers were mixed. Coles owner Wesfarmers gained 75 cents, or four per cent, to $19.50, Woolworths was 22 cents stronger at $26.37, David Jones surged 37 cents, or 13.75 per cent, to $3.06 and Harvey Norman was steady at $2.58.
The most traded stock by volume was coal seam gas producer and takeover target Queensland Gas, with 138.3 million units changing hands worth $795.25 million.
Its shares were steady at $5.75.
Preliminary market turnover was 1.64 billion shares, valued at $5.23 billion, with 658 stocks up, 407 down and 276 unchanged.
- AAP
