Australian stocks: Market closes in positive territory

PERTH - The Australian share market closed in positive territory buoyed by Rio Tinto after the global miner reached a better than expected iron ore price deal with Japan.

The benchmark S&P/ASX200 index was up 50.5 points, or 1.35 per cent, at 3,788.4, while the broader All Ordinaries index found 46.3 points, or 1.24 per cent, to 3,781.6.

On the Sydney Futures Exchange at 1616 AEST, the June share price index contract was 41 points higher at 3,792 on a volume of 20,760 contracts.

IG Markets research analyst Ben Potter said morning trade was weak with no strong offshore leads due to holidays in the United States and the United Kingdom.

But the market rebounded after Rio Tinto reached an iron ore pricing agreement with Japan's leading steelmaker Nippon Steel for 2009/10.

Rio has agreed to a 33 per cent price cut for its fines iron ore and a 44 per cent reduction in the price for its lump iron ore.

"However, the slightly better than expected result for Rio Tinto does not mean China will accept the price," Mr Potter said.

"China has been ... asking for a reduction of between 40 per cent to 45 per cent for iron ore fines.

"Rio Tinto is almost certainly going to have to offer China a better deal, purely because they consume almost three times as much as the Japanese.

"Nonetheless, this is a positive initial outcome for the producers."

Rio Tinto put on $1.38, or 2.15 per cent, to $65.46, BHP Billiton added 42 cents to $34.29 and Fortescue Metals Group Ltd rose 11 cents, or 4.37 per cent, to $2.63.

The major banks were stronger. Commonwealth Bank was up 65 cents at $35.45, ANZ gained 37 cents to $15.57, Westpac advanced 46 cents to $19.14 and National Australia Bank was 49 cents higher at $21.64.

Oil stocks were mixed. Woodside was steady at $42.50, Santos slipped four cents to $14.25 and Oil Search rose 12 cents, or 2.32 per cent, to $5.30.

At 1621 AEST, the spot price of gold in Sydney was US$953.65 per fine ounce, down US$0.75 on Monday's local close of US$954.40.

Gold stocks were largely higher. Newcrest jumped 61 cents, or 1.94 per cent, to $32.00, Newmont was steady at $5.93 and Lihir was up two cents at $3.20.

Making headlines on Tuesday, insurer Suncorp-Metway says costs for storms and weather events have exceeded its half year allowance by $70 million, after claims relating to recent flooding in Queensland and northern NSW.

Suncorp shares added four cents to $6.11.

Telstra has failed in a bid to exempt rival Optus from accessing its copper network in areas where Optus has its own cable network.

Telstra shares gained seven cents to $3.15 while Optus owner Singapore Telecommunications inched one cent higher to $2.49.

Among retail stocks, Coles owner Wesfarmers was 67 cents, or 3.31 per cent, higher at $20.92, while Woolworths found six cents to $25.78.

The top traded stock by volume was GPT Group, with 215.4 million shares worth $107.9 million changing hands.

Its securities were up 2.5 cents, or 5.1 per cent, at 51.5 cents.

Preliminary national turnover was light, reaching 1.72 billion shares, worth $3.62 billion, with 508 stocks up, 462 down and 318 unchanged.

- AAP