Australian stocks: Market closes slightly higher

SYDNEY - The Australian share market closed higher after gains in financial stocks ahead of the Reserve Bank of Australia's (RBA) interest rate decision on Tuesday.

At the close, the S&P/ASX200 was up 21 points, or 0.56 per cent, at 3756.6, while the broader All Ordinaries gained 22.4 points, or 0.61 per cent, to 3696.4.

At 1615 AEST on the Sydney Futures Exchange, the June share price index contract was 26 points higher at 3766 on a volume of 18,920 contracts.

IG Markets research analyst Ben Potter said the market closed higher on Monday, with the major banks countering falls in the resources sector.

"We saw a rotation from resource-based stocks into the financials sector, with the banks, insurance companies and wealth managers trading higher," Mr Potter said.

Mr Potter said traders were entering the market looking for a bargain.

"With such an improvement in sentiment recently, traders are beginning to be dragged into the market through fear of missing out."

Commonwealth Bank added 76 cents to finish at $36.82, ANZ lost 20 cents to $17.20, Westpac picked up 30 cents to $20.70 and National Australia Bank gained 76 cents to $23.60.

Shares in Bendigo and Adelaide Bank fell by 66 cents, or 8.2 per cent, to $7.39 after it said rising funding costs and an accounting bungle forced it to cut its full year earnings estimate by 25 per cent.

The board of the RBA holds its regular monthly meeting on Tuesday and will decide whether to further cut interest rates to stimulate a sluggish economy.

Among the major miners, BHP Billiton lost 60 cents to $34.00, while rival Rio Tinto lost $1.30 to $59.10.

Rio Tinto has reportedly drawn up contingency plans to raise as much as US$8 billion (A$11.2 billion) through a rights issue if its investment deal with China's Chinalco falls over.

The media sector ended mostly stronger.

News Corp shares put on 30 cents to $12.25 and its non-voting scrip was up 39 cents at $10.95.

Fairfax Media added 7.5 cents to $1.135, Consolidated Media was steady at $2.00, Seven Network added seven cents to $6.04 and Ten Network lost 3.5 cents to 77.5 cents.

Casino operator Crown said it was not in talks with MGM or Dubai World in relation to any potential investment by Crown in the City Center development in Las Vegas.

Crown closed eight cents higher at $6.08.

Energy stocks were mixed.

Woodside Petroleum was 13 cents lower at $39.75, Santos fell 19 cents to $17.25, while Oil Search added 22 cents to $5.51.

At 1631 AEST, the spot price of gold was US$878.00 an ounce, down US$25.70 from Friday's local close of US$903.70 an ounce.

Among the gold miners, Newcrest dropped $1.57 to $29.22, Lihir was down 19 cents at $2.91 and Newmont fell 55 cents at $6.01.

The retailers were mostly stronger.

David Jones was six cents higher at $2.91, Woolworths was up 33 cents at $25.21 and JB Hi-Fi gained 20 cents to $12.40.

Wesfarmers lost 25 cents to $19.09.

Qantas gained 8.5 cents, or 4.59 per cent, to $1.935 and Virgin Blue was steady at 33.5 cents.

Telstra gained 14 cents to $3.21, while Optus owner Singapore Telecommunications lost three cents to $2.28.

The most traded stock by volume was Sundance Resources, with 152.7 million shares changing hands worth $14.2 million.

Its stock was up two cents, or 25 per cent, at ten cents.

Preliminary market turnover was 1.82 billion shares worth $3.15 billion, with 634 stocks up, 392 stocks down and 272 unchanged.

- AAP