Shares rally for third week

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Shares rally for third week

Close The sharemarket extended its rally to take gains to three straight weeks, pushed higher today by resource companies including gold miner Newcrest, which rose to an all-time high.

At the close of trade, the benchmark S&P/ASX200 Index was up 33.6 points, or 0.7 per cent, at 4638.9, taking gains for the week to 1.7 per cent. The broader All Ordinaries Index climbed 35.1 points, or 0.8 per cent, to 4685.1.

The gains were broad-based, with energy shares jumping 1.5 per cent, materials up 0.9 per cent and financials gaining 0.6 per cent. Telecommunication was the only sector to post losses, dropping 0.3 per cent.

Japan's Nikkei average rose 1.2 per cent to a six-week closing high, helped by a weaker yen after Japan's massive yen-selling this week, leading the benchmark to book its best weekly performance this year.

The benchmark Nikkei was up 116.59 points at 9626.09, its highest finish since August 6.

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Burrell Stockbroking associate Peter Wright said it was encouraging to see broad market gains.

‘‘It’s a nice change from the last few years,’’ he said.

Resource companies did particularly well, with gold miner Newcrest recording an all-time high share price of $41.50 - up $1.32, or 3.3 per cent.

‘‘There aren’t many stocks, at that market capitalisation, that can make that claim at the moment,’’ Mr Wright said.

Underpinning Newcrest’s strong showing was the spot price of gold, which hit a new record of $US1280 in Asian trade.

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The two big miners also finished in positive territory, with BHP Billiton adding 15 cents, or 0.4 per cent, to $38.90 and Rio Tinto climbing $1.74, or 2.4 per cent, to $75.53. Fortescue Metals lost 2 cents, or 0.4 per cent, at $4.84.

In the banking sector, CBA was up 7 cents at $52.71, Westpac gained 13 cents, or 0.6 per cent, to $23.41, ANZ rose 17 cents, or 0.7 per cent, to $23.83 and NAB was 19 cents stronger, or 0.7 per cent, at $25.97.

What's next for Leighton?

In other news, Leighton Holdings’ German parent Hochtief received a takeover offer from Spain’s ACS, prompting a flurry of activity on German and Spanish stock exchanges. Hochtief owns 54 per cent of Leighton and has four seats on the Sydney-headquartered company’s board. Leighton stocks rose 45 cents, or 1.3 per cent, to $34.02.

Gas giant Santos issued 650 million euro of subordinated notes to strengthen its balance sheet, ahead of a final investment decision on a major project.

The company said the hybrid note will be classified as equity by credit agency Standard and Poor’s, so it will not hurt its credit rating or dilute its share base. Santos shares added 45 cents, or 3.6 per cent, at $13.10.

Among other energy stocks, Woodside Petroleum was 14 cents stronger at $43.77 and Origin Energy was 45 cents higher, or 2.9 per cent, at $15.90.

The poorest performer on the S&P/ASX 100 was industrial chemicals company Incitec Pivot, down 7 cents, or 1.98 per cent, at $3.46. The best-performing stock on the index was Brambles, up 23 cents, or 3.7 per cent, at $6.41.

Sundance Resources was the top-traded stock by volume, with 125.4 million shares worth $30.58 million changing hands. Its shares climbed 2 cents, or 8.9 per cent, to 24.5 cents.

Preliminary market turnover was 2.45 billion shares worth $5.58 billion, with 710 stocks up, 419 down and 339 unchanged.

Risk of consolidation

Despite today's strong showing, analysts are cautious about the short-term direction of the market.

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"After 7 per cent or so gains in shares from their August lows, shares are at risk of a correction or consolidation in the short term particularly with double dip worries" Shane Oliver, head of investment strategy at AMP Capital's said.

But Mr Oliver added that shares were still cheap relative to government bonds and once it becomes clear that the global recovery is continuing, there is likely to be a reversal of investment flows.

Analysts polled by Reuters predict Australian shares will rise 15 per cent through to the middle of next year, with the US economic recovery set to slowly recharge investor confidence.

AAP, with BusinessDay

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