Australian shares hit 3-1/2-month highs on China momentum
(Adds analysis, quotes, stocks on the move)
SYDNEY, Sept 3 (Reuters) - Australian shares rose 0.2 percent on Tuesday to 3-1/2-month highs on momentum from better-than-expected Chinese manufacturing data, although trading was cautious as investors awaited policy signals from the Reserve Bank.
Mining stocks helped buoy the index after copper rose on strong manufacturing data from top metals consumer China, boosting optimism about metals. BHP Billiton Ltd and Rio Tinto Ltd climbed 0.9 percent and 2.7 percent respectively.
Heavyweight financials were also trading higher. Westpac Banking Corporation added 0.9 percent and National Australia Bank rose 0.4 percent.
The S&P/ASX 200 index rose 8.2 points to 5,196.5 by 0121 GMT, its highest point since May 22. The benchmark rose 1 percent on Monday.
The index traded sideways for most of August but rises for the past four consecutive sessions have taken it to 3-1/2-month highs, outperforming regional emerging markets that are slowly recovering from a rout experienced during mid to late August.
The Thomson Reuters South East Asia Index lost 9.7 percent in August, compared to Australia which posted a modest gain of 1.6 percent in the same period.
"If the market does break to fresh multi-year highs, even before the election, we could see many surprised investors respond by chasing the breakout, leading to unexpected near-term upside in Australian equities," said Tim Radford, a global analyst at Rivkin Securities in a note.
Australians go to the polls in a general election on Saturday, with the conservative opposition expected to oust the Labor government.
Elsewhere, a handful of defensives were trading lower, with food retail staples Woolworths Ltd and rival Wesfarmers Ltd both down 1.3 percent. QBE Insurance Group Ltd slipped 0.2 percent.
The Reserve Bank of Australia will announce its cash rate decision at 1630 GMT, though markets expect it to remain unchanged at 2.5 percent after a cut last month.
"Investors don't expect a rate cut this afternoon," said Biyi Cheng, head of dealing APAC at City Index, adding that investors were instead looking to what the RBA might do in November.
"The focus of the market has returned to fundamentals such as economic data, including Australia's GDP on Wednesday and U.S. non-farm payrolls on Friday."
Among economic data released on Tuesday, Australia retail sales rose 0.1 percent in July but missed analyst forecasts that centred on a rise of 0.4 percent, according to a Reuters poll.
Retail stocks were mixed with department store giant Myer Holdings Ltd adding 0.5 percent while rival David Jones Ltd slipped 0.2 percent.
Ramelius Resources Ltd jumped 5 percent after the company announced it has acquired the advanced Vivien gold project in Western Australia for A$10 million.
The local bourse had limited overseas leads as Wall Street was closed for the U.S. Labor Day holiday on Monday.
New Zealand's benchmark NZX 50 index rose 0.2 percent or 8.8 points to 4,604.8.
(Reporting by Thuy Ong and Maggie Lu Yueyang; Editing by Stephen Coates)
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