Australia shares jump 1.7 pct in broad rally on U.S. debt deal hopes
(Adds analysis, quotes, stocks on the move)
SYDNEY Oct 11 (Reuters) - Australian shares soared 1.7 percent on Friday morning, its biggest gain in three months, driven by a rally on Wall Street as politicians in Washington moved to break a U.S. debt impasse that has soured market sentiment in the past two weeks.
A strong financial sector underpinned the market. Westpac Banking Corp was the highlight of the morning session, climbing 2.3 percent after acquiring Lloyds Banking Group's Australian businesses for A$1.45 billion.
Top lender the Commonwealth Bank of Australia added 1.7 percent while Australia and New Zealand Banking Group rallied 2 percent.
The 'Big Four' banks have had a stellar year so far, with a combined average gain of 26 percent compared to the broader market's 12.4 percent rise. Investors have piled into the blue-chip stocks for their high dividend yields and record profits.
The S&P/ASX 200 index rose 88 points to 5,235.1 by 0018 GMT, its biggest one day gain since July 2. The benchmark slipped 0.1 percent on Thursday and is on track to add 0.4 percent for the week.
The market took its lead from major U.S. stock indexes, which posted their strongest rally in more than nine months on Thursday after signs of progress in negotiations to raise the U.S. debt limit.
House Republican leaders acted to break a logjam in talks by proposing a bill to raise the government's debt limit without attachments, a significant move as the Oct. 17 deadline that would trigger an historic U.S. debt default closed-in.
"Although it's positive to see the Republicans now willing to negotiate, there is still plenty of headline risk that could shake risk assets in the coming week," said Tim Radford, global analyst at Rivkin Securities in a note.
All the same, the signs of progress after nearly two weeks of brinkmanship in Washington spurred a relief rally.
"It's the first time in a while it's green across the screen," said Chris Tynan, a dealer at Arnhem Investment Management.
"Your cyclical industrials are outperforming traditional defensives such as utility and telecom sectors."
Industrials giant Leighton Holdings Ltd jumped 1.8 percent while top telecommunications provider Telstra Corporation Ltd rose 0.9 percent.
The mining sector also joined the rally as copper rose overnight. BHP Billiton Ltd advanced 1.3 percent while rival Rio Tinto Ltd climbed 2 percent.
Bega Cheese Ltd soared 3 percent to an all-time high of A$3.81, after the company said it intends to proceed with its offer to Warrnambool Cheese and Butter shareholders. Shares in Warrnambool added 0.7 percent.
Elsewhere Seven West Media Ltd gained 2.6 percent to A$2.36 after signing a long-term affiliation agreement with Prime Media Group Ltd Prime Media jumped 2 percent.
New Zealand's benchmark NZX 50 index rose 0.7 percent to 4,749.2.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)
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