July 23, 2014 / 2:20 AM / 3 years ago

Australia shares trade at new 6-year highs, miners strong

* ASX 200 adds 0.7 percent to trade at 6-year highs

* Miners lead; BHP beat its own guidance for iron ore output

* Recovery in China and robust earnings in U.S. underpin (Adds analysis, quotes, stocks on the move)

By Thuy Ong and Gyles Beckford

SYDNEY/WELLINGTON, July 23 (Reuters) - Australian shares added 0.7 percent on Wednesday, rising to fresh six-year highs after Wall Street gained on solid earnings and investors digested a mixed inflation report, but tensions in Gaza and Ukraine kept gains in check.

Blue chip stocks underpinned the market, with the 'Big Four' banks gaining ground and global miners rising as zinc hit a three-year high and aluminium touched a 16-month peak overnight.

Among top-tier miners, BHP Billiton Ltd, the world's third-largest supplier of iron ore, jumped 1.8 percent, and Rio Tinto Ltd climbed 0.9 percent. BHP beat its own guidance for full-year iron ore output, mining a record 225 million tonnes in fiscal 2014, 4 percent ahead of its forecast.

"I think the BHP production result has really underscored the positive sentiment in the market," said Ben Le Brun, a market analyst at OptionsXpress.

"The gains that we have been seeing have been on very low volumes, so there's not a lot of confidence or conviction behind these six-year highs. The Australian share market does need to play catch-up to other share markets."

The country's No.3 lender, Australia and New Zealand Banking Group, and top bank by market capitalisation Commonwealth Bank of Australia, both gained 0.7 percent.

The S&P/ASX 200 index climbed 36.1 points to 5,579.4 by 0146 GMT, its highest level since June 2008.

The benchmark index has been underpinned by signs that China, Australia's largest export market, is regaining momentum, while a robust earnings season in the United States has also lifted investor sentiment.

Elsewhere, investors shrugged off a mixed inflation report, with Australian consumer prices rising by a modest 0.5 percent last quarter.

Among defensives, Australia's top telecommunications provider Telstra Corporation Ltd added 0.5 percent to continue its solid run. Shares in Telstra are 3.4 percent higher for the year.

Starpharma Ltd rocketed 14.4 percent to 4-month highs of A$0.84 after the biotech firm received key regulatory approval, making its virus-killing condom one step closer to sale.

Computershare Ltd climbed 1.4 percent after saying it will acquire Homeloan Management Ltd for an upfront consideration of GBP 47.5 million.

The New Zealand share market nudged higher in featureless trading, with the benchmark NZX-50 index 4 points higher at 5,138.3 to a two-week high.

Top stock Fletcher Building Ltd was up 1.2 percent at NZ$9.05, close to a two-week high.

Telecom Ltd was nearly 1 percent higher at NZ$2.87, the highest since mid-August 2012, a move above that level would take the stock back to a near six-year high.

The strength of the leaders underpinned the market and offset weakness in mid- and small-cap stocks.

The market's newest stock software concern ikeGPS Ltd had a weak debut after a NZ$21 million IPO, trading as low as NZ$0.90 from an issue price of NZ$1.10.

Fruit grower and exporter Scales Corp Ltd IPO-SCA.NZ will list on Friday, after it sold 93 million existing and new shares at NZ$1.60 each. (Editing by Jacqueline Wong)

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