Australia shares rally to 21-month high, banks strong

Tue Jan 29, 2013 12:50am EST

(Adds details, comments)
    SYDNEY, Jan 29 (Reuters) - Australian shares rallied 1.1
percent to a 21-month high led by financial stocks when trade
resumed on Tuesday after a three-day holiday weekend.
    Westpac Banking Corp helped lead the financial
sector, soaring 2.4 percent to reach a 3-year high of A$28.22.
Australia's no.1 lender, the Commonwealth Bank of Australia
 jumped 1.8 percent to reach an all-time closing high of
A$64.73. 
    "Improving equity markets, falling bad debts combined with
an improving global outlook in a low interest rate environment
has seen our banks clearly sought after," said Ben Taylor, sales
trader at CMC Markets.
    The S&P/ASX 200 index finished the day 53.8 points
higher at 4,889. The benchmark finished up 25 points at 4,835.2
on Friday. The market was closed on Monday for the Australia Day
holiday.
    "It seems that a lower interest rate environment is starting
to improve confidence among the Australian business community.
Mix this in with the China rebound and we have a sharp rise in
confidence," said Taylor. 
    Insurance companies fell as floods and storms hit Queensland
and New South Wales states. QBE Insurance Group Ltd 
lost 2.7 percent. Suncorp dropped 1.9 percent after the
insurer said it had received 4,500 claims related to
Queensland's floods and storms but said it was prepared for the
financial impact. Insurance Australia Group Ltd bucked
the trend, edging up 0.2 percent.
    Lakes Oil surged 50 percent after mining magnate
Gina Rinehart bought a major stake in the oil and gas explorer.
    Defensives finished the day firmer. Blood products maker CSL
Ltd rallied 3.7 percent while Australia's top
telecommunications provider Telstra jumped 2 percent to
a five-year high of A$4.67. 
    "With defensive stocks looking more and more bloated, and
with the end of the month fast approaching, fund managers may
see value in reweighing portfolios from equities to other
instruments due to their stellar performance over the month,"
said Stan Shamu, market strategist at IG Markets.
    Global iron ore miners were slightly firmer. BHP Billiton
Ltd inched up 0.2 percent while rival Rio Tinto Ltd
 was up 0.1 percent. 
    More restocking by Chinese steelmakers and limited spot
cargoes could nudge iron ore prices higher this week, although
gains will be capped with buyers not keen on chasing pricey
cargoes and sellers willing to wait until after the February
Lunar New Year holiday. 
    New Zealand's benchmark NZX 50 index slipped 4.1
points, ending the day at 4,200.3. 


 (Reporting by Thuy Ong; Editing by)
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