Australian shares posted broad-based gains as investors pinned hopes on more stimulus efforts by major economies to revive global growth.

The ASX200 benchmark share index rose 23.8 points, or 0.6 per cent, to 4147.7 points. The broader All Ordinaries added 22.4 points, or 0.5 per cent, to 4173.8 points.

All major sub-indexes were higher, although renewed falls by big miners Rio Tinto and Fortescue Metals kept the materials sub-index to a 0.2 per cent gain.

Energy stocks added 0.8 per cent and financials rose 0.6 per cent, while Telstra drove the telcos sub-index 1 per cent higher.

‘‘The lack of economic news meant that European headlines mixed with company specific announcements guided our market today,’’ said CMC sales trader Ben Taylor.

‘‘Speculation overnight that the European Stability Mechanism may obtain a banking licence had the markets covering its shorts (which lifted stocks),’’ said Mr Taylor. ‘‘The implication that the ESM would be able to leverage up via loans through the European Central Bank had the market excited.’’

European markets are poised for modest gains when they resume trading shortly.

The Australian dollar, meanwhile, continued to creep higher against major currencies. It touched a fresh four-month high against the pound and was recently buying 66.8 pence - just days before the Olympics begin in London.

It was also buying $US1.033, 85.1 euro cents and just under 81 yen.

Major newsmakers

Among major stocks making news, Qantas had its best day in six weeks after confirming it has held discussions with Dubai-based Emirates about a possible tie-up.

Qantas shares jumped 9.5 cents, or 9.6 per cent, to 108.5 cents. Smaller rival Virgin Australia also advanced, adding 1 cent, or 2.6 per cent, to 40 cents.

Wesfarmers ended 27 cents higher, or 0.8 per cent, to $32.25 after it reported fourth-quarter sales growth at its key Coles division.

Rival Woolworths gained for a fourth straight day, reaching a 20-month high of $28.35 at one point. It ended the day up 11 cents, or 0.4 per cent, at $28.28.

Caltex gained 20 cents, or 1.4 per cent, to $14.26 as investors digest news that the company will close its Kurnell oil refinery in Sydney with the loss of about 630 jobs.

One big mover on the day was mining minnow, Sirius Resources. Its shares leapt almost eight-fold to 45 cents after the nickel explorer reported some success in its Western Australian exploration. Trading volume swelled almost 100-fold, compared to the daily average over the past 12 months, to 56.5 million shares.

Growth concerns

Major miners were mixed as on-going concerns about the global outlook saw major commodity prices mixed.

Investors will be watching tonight for more signs that the US economy is slowing, with durable goods orders for June scheduled for release.

Last night's release of weak new home sales data added to expectations that the US Federal Reserve will have no choice but to step up efforts to revive the world's biggest economy.

‘While the speculation might be just that, there is, however, a growing expectation that we are getting closer to further rounds of global stimulus,’’ said CMC's Mr Taylor.

‘‘Last night’s US housing data was just another nail in the coffin for the United States economy, talk that the Fed will act sooner than later may be the backstop needed to stop the rot,’’ he said.
 
BHP Billiton rose 12 cents, or 0.4 per cent, to $30.87, while rival Rio Tinto shed 50 cents, or 1 per cent, to $50.51.

Fortescue lost more ground, dropping 11 cents, or 2.7 per cent, to $4 even.

Banks, gold miners

Among the banks, Commonwealth Bank was up 55 cents at $55.41, Westpac was 16 cents stronger at $22.61, ANZ gained two cents to $22.66, and National Australia Bank was up two cents at $23.84.

Gold miners shone in what appeared to be an otherwise off day for the resources sector, with spot gold prices closing at $US1,606.06 per fine ounce in Sydney, up $US21.42 from $US1,584.64 on Wednesday.

Newcrest Mining was up 22 cents at $22.37 after it said it exceeded its 2012 financial year copper production targets and met its gold production forecast.

OZ Minerals lost five cents to $7.38 after revealing a sharp quarterly jump in production costs while Energy Resources of Australia lost half a cent to $1.47 after narrowing its first-half net loss.

National turnover was 1.37 billion securities worth $3.91 billion, with 458 stocks up, 412 down and 341 unchanged.

Chris Zappone, BusinessDay, with AAP, Reuters