Aussie stocks at 9-mth high

SYDNEY - The Australian share market closed moderately stronger at a fresh nine-month high, led by the banks, on increasing optimism that the economic downturn won't be as severe as expected.

At the 1615 AEST close, the benchmark S&P/ASX200 index was up 47.6 points, or 1.15 per cent, at 4,190.4, its the highest closing level since November 5.

The broader All Ordinaries index added 47 points, or 1.13 per cent, to 4,195.9.

On the Sydney Futures Exchange, the September share price index contract was up 55 points at 4,152 points on 26,499 contracts.

The major banks led the overall market over one per cent higher after their outlook was upgraded by brokers Citi.

Citi analyst Craig Williams raised his recommendations on all four banks to Buy from Hold.

Mr Williams said he was more optimistic about the outlook of the banks because the economic downturn was likely to be less severe than previously thought.

The four major banks gained. National Australia Bank rose 87 cents, or 3.8 per cent, to $23.77, ANZ gained 62 cents, or 3.62 per cent, to $17.74, Commonwealth Bank increased $1.72, or 4.31 per cents, to $41.62 and Westpac added 56 cents, or 2.69 per cent, to $21.37.

Shaw Stockbroking senior dealer Jamie Spiteri said recent commentary and forecasters were starting to shake off the lingering pessimism in the market.

Mr Spiteri said the banking upgrade was indicative of the change in attitude among investors.

He also said the housing approvals number showed that a moderate recovery appeared to be taking place.

"There is an increasing belief that the worst is behind us so the rate of recovery is going to be a bit faster than expected before," Mr Spiteri said.

Building approvals rose 9.3 per cent to 11,086 units in June, seasonally adjusted, from an upwardly revised 10,144 units in May, the Australian Bureau of Statistics (ABS) said.

The result was better than the median market forecast for a gain of eight per cent in the month.

Also helping the market higher were major stocks Telstra, CSL and Fortescue Metals.

Telecommunications giant Telstra gained nine cents, or 2.55 per cent, to $3.62, blood products maker CSL increased 60 cents, or 2.01 per cent, to $30.47, and iron ore miner Fortescue jumped 27 cents, or 6.49 per cent, to $4.43.

Mr Spiteri said Telstra and CSL were benefitting now after being underperformers in recent months.

Dragging on the market was its biggest stock, BHP Billiton, which declined after the price of oil and metals declined overnight.

BHP slipped 28 cents, or 0.75 per cent, to $37.15.

Rival miner Rio Tinto gained 10 cents to $58.10.

At 1631 AEST, the spot price of gold in Sydney was US$930.30 per fine ounce, down US$6.35 on Wednesday's close of US$936.65.

But Lihir Gold gained after it said it achieved record production of 612,000 ounces in the first six months of calendar 2009 and remained on track to meet earlier full-year guidance of one million to 1.2 million ounces.

Lihir gained five cents, or 1.85 per cent, to $2.75, while fellow gold miner Newcrest was flat at $30.00.

In other news, Leighton Holdings gained after it announced it was part of the consortium that was awarded the $3.5 billion contract to build Melbourne's desalination plant. Leighton added $1.41, or 5.13 per cent, to $28.87.

Global beverages firm Foster's Group has set up a US$500 million three-year syndicated loan facility involving Asian banks. The stock fell one cent to $5.48.

Rural services and automotive interiors supplier Elders' shares are in a trading halt pending an announcement about a transaction. Elders last traded at 27.5 cents.

Junior minerals explorer Hannans Reward did a deal with Kagara and St Barbara to buy unexplored ground considered prospective for nickel and gold in Western Australia. Hannans shares jumped four cents to 74 cents.

Perseus Mining will proceed to mining it flagship Ayanfuri project in Ghana, West Africa, where the junior explorer has defined a large maiden gold reserve. Shares in Perseus fell two cents to 74 cents.

Whitehaven Coal has announced a capital raising of $176 million from institutional investors and predicted a "significant increase" in earnings in 2008/09.

Whitehaven Coal shares were in a trading halt, and last traded at $3.21.

Investment firm Milton Corporation said net profit for the 2008/09 financial year fell 59 per cent due to writedowns on its investment portfolio.

Milton shares added 44 cents to $16.12.

Austar United Communications posted a first half net profit of $35.5 million and said it increased its subscriber pay TV numbers.

Austar shares gained 4.5 cents to 96 cents.

GPT Group confirmed it is reviewing options in its joint venture with delisted investment bank Babcock & Brown, which it said was "unlikely to have any material value in the future".

GPT shares gained 1.5 cents to 55 cents.

Diagnostics developer HealthLinx obtained European approval for its test for ovarian cancer, OvPlex, which the company says will enable sales to begin in the United Kingdom and Ireland.

HealthLinx shares rose 5.9 cents to 8.4 cents.

The most-traded stock by volume was Asciano Group, with 186.3 million shares worth $284.4 million changing hands.

Asciano shares added one cent to $1.54.

Preliminary market turnover was 2.19 billion shares worth $5.62 billion, with 576 stocks up, 450 down and 312 unchanged.

- AAP