AUSTRALIAN shares surged more than 4 per cent at close of trade today as Asian markets soared after the US cut interest rates. The S&P/ASX 200 index rose 155.5 points, or 4 per cent, to 4001.1, marking the second consecutive session of gains and the first time it has closed above 4000 points since October 22. The All Ordinaries gained 151.5 points to 3957.3. Amid the burst from regional bourses, South Korea’s KOSPI index posted the biggest gain, rising 12.6 per cent this afternoon. The Hang Seng, Hong Kong's benchmark, soared more than 10 per cent and Japan’s Nikkei 225 gained 7 per cent. Investors are betting on central banks around the world following the US lead on interest rates, starting with the Bank of Japan tomorrow, as authorities race to prevent the world from sliding into recession. The Bank of England, the European Central Bank and the Reserve Bank of Australia are expected to cut rates next week. In Australia, investors were also cheered by comments from Reserve Bank deputy governor Ric Battellino today, that Australia was on track to avoid a recession, just as it did in 2001. A surge in commodity prices overnight also buoyed investor mood. The Australian dollar put on more than 7 per cent against the greenback after the US Fed’s rate cut triggered a surge in regional markets and boosted the market’s appetite for risky investments. Mr Battellino’s comments - that persistent inflation could limit further falls in interest rates - also supported the Australian currency. The Aussie was trading at US68.33 late this afternoon, after hovering between US68.8c and US66.27c during the day. It closed at US64.06c yesterday. ABN Amro Morgans investment adviser Bill Bishop said: “The market has saluted what the US has done, but it’s reserving judgment because it wants to see if it makes any difference to economic conditions in America.” The surge in base metal prices by as much as 12 per cent on the London Metal Exchange added to the upward burst, while crude oil raced towards $US70 a barrel in Asian trading, after jumping more than $US4 overnight. In Australia, oil producers and miners accounted for most of the gains in local shares as the recovery in commodity prices boosted confidence in these sectors. BHP Billiton rose $2.30 (8.8 per cent) to $28.60 and Rio Tinto gained $6.54 (9.2 per cent) to $77.32. Woodside Petroleum was up $4.91 (12.8 per cent) to $43.16, Santos was higher by $1.25 (9.8 per cent) to $13.95 and Oil Search gained 59 cents (15.9 per cent) to $4.30. Among the gold miners, Lihir Gold jumped 33c (19.2 per cent) to $2.05 and Newcrest Mining added $1.82 (9.7 per cent) to $20.52, after the spot gold price rose nearly 2 per cent in Asian trading. The financial sector posted more modest gains, with the major banks up between 0.2 and 4.9 per cent. Westpac finished up 4c (0.2 per cent) at $20.30 despite reporting a 12 per cent rise in annual net profit. National Australia Bank added $1.13 (4.9 per cent) to $24.19, Commonwealth Bank rose 11c (0.3 per cent) to $40.19 and ANZ gained 32c (1.9 per cent) to $17.56. Meanwhile, investors are expecting a strong night on Wall Street with the Dow futures up 233 points this afternoon. More economic data will be released, including third-quarter gross domestic product (GDP) and initial jobless claims for the week ending October 25. The market expects GDP will have contracted by 0.5 per cent on an annual comparison, compared with a 2.8 percent increase in the second quarter.

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