(Updates to close)
By Nikhil Nainan
March 13 (Reuters) - Australian shares rebounded sharply on Friday to end firmly in positive territory as hopes of more stimulus from the United States offered a measure of support to world markets battered by coronavirus fears.
After plunging 8% earlier in the session, a sudden cross-sector recovery led by healthcare, financial and energy stocks powered the S&P/ASX 200 index 4.4% higher to their biggest daily gain in more than 11 years.
Still, the benchmark suffered its worst week since the global financial crisis in 2008 as investors dumped riskier assets after the aggressive global spread of the flu-like virus threatened growth.
“Given that this week has been such a fantastic week for short sellers, you’d have to think there was a lot of short covering happening ahead of the weekend and the U.S. session,” said Julia Lee, chief investment officer at Sydney-based Burman Invest, adding that expectations of U.S. stimulus were also aiding sentiment.
The White House and U.S. lawmakers neared an agreement on a coronavirus economic aid package, House Speaker Nancy Pelosi said on Thursday, adding she hoped to announce a deal on Friday.
U.S. futures were trading higher, and markets in Asia recovered some of their deepest losses by the end of a session in which tight liquidity exaggerated moves.
The Reserve Bank of Australia injected an unusually large amount of cash into the financial system on Friday as panic selling across global markets threatened to drain liquidity.
Australia’s “Big four” banks recovered from sharp losses earlier in the session, with top lender Commonwealth Bank of Australia surging 5.2%, while the other three rose between 1.5% and 3%.
Healthcare stocks drove gains on the benchmark index, with heavyweight CSL Ltd leading gains after surging 11.9% as a weaker Aussie dollar also lent support to the export-reliant sector.
A 2% jump in oil prices supported energy stocks, with top oil and gas explorer Woodside Petroleum settling nearly 10% higher, while Oil Search surged 17.2%.
Global miners BHP Group and Rio Tinto ended 1.5% and 4.8% higher, respectively.
In New Zealand, the benchmark S&P/NZX 50 index closed 4.9% lower, missing the late surge that supported Australia and many other markets in Asia.
Tourism Holdings, which fell 16.7%, was the biggest percentage loser on the benchmark. Only two stocks, a2 Milk Company and Fonterra, ended in positive territory. (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Devika Syamnath)