(Updates with closing prices, comments)
MELBOURNE Dec 3 Australian shares gained 0.6
percent on Monday to reach a five-week high, as investors bet on
the Reserve Bank of Australia cutting official interest rates to
bolster the flagging economy.
Weaker than expected retail sales, job advertisements and
corporate profits figures released on Monday all supported
expectations for a rate cut by the central bank at its policy
meeting on Tuesday.
Following the data, interbank futures pointed to a
75 percent chance that the bank would ease rates.
"For many parts of corporate Australia, business conditions
are as tough as in the global financial crisis," said CommSec
chief economist Craig James.
"Profits have fallen for the fourth straight quarter,
inventories have lifted for the fourth straight quarter and
sales are sluggish across many key sectors," he said, adding
there was a strong chance of a rate cut on Tuesday.
A Reuters poll showed 16 of 23 economists expect the RBA to
cut its cash rate by 25 basis points to 3.0 percent, matching
record lows seen during the global financial crisis.
The benchmark S&P/ASX 200 index advanced 25.5 points
to 4,531.5, the highest closing level since Oct. 23.
The benchmark rose 2.1 percent last week.
Despite the increased expectations for a rate cut, retailers
were mostly lower after data showed Australia's retail sales
were flat in October, missing economists' expectations for a
rise of 0.4 percent.
Among the top retailers, department store Myer Holdings
closed down 1.8 percent and smaller rival David Jones
lost 2.0 percent.
Defensive shares including telecoms, food and healthcare led
the gains on Monday, with Telstra up 0.9 percent, baker
Goodman Fielder up 1.5 percent and blood products maker
CSL Ltd rising 2.4 percent.
Shares in Woodside Petroleum Ltd gained 0.9 percent
to A$34.11 after the company announced plans to acquire a 30
percent interest in a major liquefied natural gas (LNG)
discovery off the coast of Israel in a $1.25 billion
Shares in Gindalbie Metals Ltd slumped 11.9 percent
to A$0.26 after the iron ore junior completed a A$40 million
fully underwritten placement to institutional investors.
New Zealand's benchmark NZX 50 index slipped 1 point
(Reporting by Victoria Thieberger; Editing by Jonathan