By Jacob Greber Dec. 10 (Bloomberg) -- Australian home-loan approvals gained for the first time in nine months and consumer confidence surged, suggesting the most aggressive interest-rate cuts since 1991 may revive the slowing economy. The number of loans granted to build or buy homes and apartments rose 1.3 percent in October from the lowest level since 2001, the statistics bureau said in Sydney today. An index of consumer sentiment jumped 7.5 percent in December, the second-straight gain, a Westpac Banking Corp. survey showed. Households are benefiting after the central bank slashed its benchmark rate by three percentage points since September and the government handed out A$10.4 billion ($6.8 billion) to stoke spending. Today’s reports are “encouraging” after economic growth slowed last quarter to the weakest pace in eight years, Treasurer Wayne Swan said. “These are the signs the Reserve Bank is looking for: that households are responding,” said Su-Lin Ong, a senior economist at RBC Capital Markets Ltd. in Sydney. “The Reserve Bank would be reasonably confident that they’re tempering the depth of the downturn.” Today’s gain in loan approvals compared with a median forecast for a 1 percent increase in a Bloomberg News survey of 21 economists. The Australian dollar traded at 65.91 U.S. cents at 12:58 p.m. in Sydney from 65.95 from before the report was released. The two-year government bond yield fell 1 basis points, or 0.01 percentage point, to 3.02 percent. Retailers’ Shares The S&P/ASX 200 stock index rose 0.4 percent to 3,619.60. Shares in Woolworths Ltd., Australia’s biggest retailer, climbed 1.2 percent and those in David Jones Ltd., the nation’s second- largest department store operate, gained 1.7 percent. “Today’s report on consumer confidence is encouraging given the challenging global environment,” Swan told reporters in Sydney. “There’s no doubt global conditions have taken a turn for the worse, even in the last few weeks.” Australia’s economy expanded 0.1 percent last quarter from the previous three months, the weakest since 2000, as household spending and export growth stalled. The central bank has cut interest rates to a six-year low of 4.25 percent. Prime Minister Kevin Rudd, trying to stop Australia’s economy from slipping into its first recession in 17 years, tripled in October the government’s A$21,000 ($13,800) grant to first-home buyers of newly built dwellings. The government also gave money to pensioners and families, with most of the payments made this week. Significant Stimulus The reduction in borrowing costs and government spending will provide “significant” support for the economy in 2009 amid the global slowdown, central bank Governor Glenn Stevens said yesterday. “There is scope to do more with macroeconomic policy settings if needed,” he added. The Reserve Bank of Australia will reduce the rate by further half-point when the board next meets on Feb. 3, according to 16 of 21 economists surveyed by Bloomberg News. An index measuring whether it’s a good time to buy a major household item jumped 28.2 percent in December from November, according to the consumer confidence survey. Westpac Bank’s poll of 1,200 consumers was conducted between Dec. 1 and Dec. 7. “The good news on interest rates is finally getting some traction,” said Bill Evans, Westpac’s chief economist in Sydney. “It is sending a welcome message to beleaguered retailers as they move into the critical last few weeks before Christmas.” The total value of lending rose 1.9 percent to A$17.4 billion in October, the approvals report showed. Lending to owner-occupiers advanced 2.4 percent, while the value of lending to investors who plan to rent or resell homes gained 0.7 percent. To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

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