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Australia shares rise 0.5 pct in broad rally, gains seen limited
July 14, 2014 / 2:47 AM / 3 years ago

Australia shares rise 0.5 pct in broad rally, gains seen limited

* ASX200 gains 0.5 percent

* Gains across the board but miners under pressure (Adds analysis, quotes, stocks on the move)

By Swati Pandey and Naomi Tajitsu

SYDNEY/WELLINGTON, July 14 - Australian shares rose 0.5 percent on Monday, led by financial and consumer goods companies, but analysts said valuations are getting stretched and likely to keep further gains in check.

After a promising start to the year, the market has lost momentum due to falling iron ore prices and a hit to consumer confidence from an unexpectedly austere federal budget. For the first-half, stocks rose just 1.9 percent.

“Liquidity is still not as good as it used be,” said Damien Boey, equity strategist at Credit Suisse.

“People are a little bit more positive about the growth outlook today than they are about valuations.”

The S&P/ASX 200 index rose 27.8 points to 5,514.6 points by 0203 GMT. The benchmark lost 0.7 percent last week, snapping three weeks of gains with its biggest one-week fall since mid-June.

The ‘Big Four’ banks continued their run higher as investors chased their high yields, with Westpac Banking Corp adding 0.7 percent and Commonwealth Bank of Australia climbing 0.66 percent.

Iron ore miner Fortescue Metals Group ltd dropped for a second session after its full-year iron ore shipments came in slightly below target despite hitting an above-capacity output rate in June. It was down 1.5 percent.

Iron ore miners have been pressured by a 30 percent drop in prices since January.

Aurora Minerals rose more than 10 percent after it bought a stake in Africa’s Predictive Discovery while Karoon Gas rose 2.6 percent after it contracted a rig for a Santos basin drilling campaign.

New Zealand’s benchmark NZX-50 index edged up 14.7 points to 5115.97, pushing away from a two-week low hit late last week.

Gains were led by accounting software developer Xero , which gained 2.2 percent, and casino operator Sky City , which rose 1.3 percent to rebound from a five-month low on Friday.

Xeroalso reversed losses, and was supported by an announcement late last week that the fast-growing tech company had tied up with New Zealand virtual payments provide Optimiser, which will enable Xero’s small business customers access to low-cost credit card services. (Editing by Kim Coghill)

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