Australian shares rise for the first day in four as investors bet recent pessimism about the economy was overdone. Miners led gains.
Local investor interest also focused on the central bank's view of the global economy and its view that an interest rate rise may still occur during the election campaign if inflation figures warranted such a move.
The benchmark S&P/ASX200 Index ended the day up 45.3 points, or 1 per cent, at 4403.6 points, while the broader All Ordinaries gained 46 points, or 1.1 per cent, to 4418.7 points.
On a sector-by-sector basis, materials jumped 1.6 per cent, financials added 1.1 per cent while industrials rose 0.9 per cent.
What you need to know
- The Australian dollar was recently buying 87.8 US cents
- Asian markets advanced on China optimism
- Spot gold was flat at $US1183 an ounce
- Oil was little changed below $US77 a barrel
- Dow futures were up just 1 point at 10,061
In late news potentially damaging to retail shares tomorrow, upmarket retailer Country Road said stiff competition in the industry may see profit for the year just ended slide as much as 20 per cent on the previous year's levels. Its shares last traded at $3.72.
The minutes of the latest monetary policy meeting of the Reserve Bank of Australia on July 6, which were released late this morning, indicate that inflation figures due on July 28 will be crucial to the interest rate outlook.
The minutes also confirm that uncertainty surrounding the faltering European economy influenced the decision to hold interest rates this month and could do so again.
The RBA said the underlying measure of inflation would fall to be below 3 per cent - and into its preferred target zone - for the first time in three years.
RBS Morgans private client adviser Trent Muller said the RBA minutes certainly helped the local market in terms of painting a fairly positive picture on the domestic front, but still outlining some concerns associated with Europe.
''Also the Chinese market rallied for quite a bit this afternoon,'' Mr Muller said. ''So we got some leverage there on speculation that the Chinese government is not going to have to tighten monetary policy, moving forward, which is certainly beneficial for the resources companies.
''As a result, you've got (global miners) BHP Billiton and Rio Tinto leading the leverage in the market today.''
Shares in BHP Billiton rose 55 cents to $38.30, and Rio Tinto lifted $1.47 to $66.50.
Mr Muller said the mood of investors was fairly subdued, given the recent share market volatility.
''Particularly, with the US (companies) reporting season, it's very difficult to know where we're going to go on a day-to-day basis,'' he said.
In the news
Company news centred on the resources sector.
Minerals sands miner Iluka Resources was 6 cents higher at $5.41 after it said its June quarter production fell following the closure of its Western Australian operations, but sales volumes were up strongly in the first half of 2010.
Uranium producer Paladin Energy was off 3 cents at $3.58 after it said it was considering taking over NGM Resources.
NGM was in a trading halt, having last traded at 9.3 cents.
Conquest Mining was steady at 30 cents as it said it expected to sign sales deals with two Chinese smelter companies for product from its Mt Carlton gold, silver and copper project in North Queensland in coming months.
The securities of Cougar Energy were suspended from trading pending the release of an announcement regarding the Queensland government’s decision to maintain a halt at the company’s Kingaroy pilot plant. Cougar last traded at 7.5 cents.
Among other stocks, Qantas Airways ascended 11 cents to $2.38 as it said its new check-in facility to be launched in Perth next week for some of its premium frequent-flyer members will help reduce queueing time at the airport.
Luxury department store David Jones picked up two cents at $4.57 after it terminated a lease in Queensland's Toombul Centre to concentrate on a more profitable store nearby.
Airport owner MAp Group rose six cents to $2.88 as it said passenger traffic at its three airports grew in June, with the strongest performance at Sydney Airport.
Gold, most-traded stock
The price of gold at 1634 AEST was $US1183.50 per fine ounce, down $US8.03 on Monday’s close of $US1191.53.
The top-traded stock by volume was Arrow Energy, with 62.8 million shares worth $293.03 million changing hands.
Arrow was 33 cents lower at $4.67.
Preliminary market turnover was 1.69 billion shares worth $4.81 billion, with 606 stocks up, 395 down and 318 unchanged.
On the Sydney Futures Exchange, the September share price index futures contract had risen 55 points to 4,383 points, with 29,441 contracts traded.
- For market data by sector, click here
- For share price information, click here
- For the latest currency movements, click here
AAP, with BusinessDay