AB: Australia shares up 0.7 pct on China stimulus hope
Australian shares rose 0.7 percent on Thursday, with Rio Tinto Ltd and other miners leading gains, as hope remained that increased spending in China could help support the global economy.
Global markets, metal and oil prices had gained on speculation China would add to November's stimulus package. There was no such announcement but Premier Wen Jiabao said China would ramp up its budget deficit to meet the government's 8 percent growth target. See [nPEK39999].
"They certainly didn't announce the stimulus package that everyone was looking for," said Juliette Saly, market analyst at Commonwealth Securities.
"The encouraging news though is that they are saying they will increase spending so that should counter the economic slowdown." Saly added there was also still the possibility a package could be announced later.
The benchmark S&P/ASX 200 index <.AXJO> rose 22.1 points to 3,188.5, after having been as high as 3,218.3. The gains broke a four day run of falls, which shaved 5.4 percent off the index.
New Zealand's benchmark NZX 50 <.NZ50> index gained 0.9 percent to 2,491.4.
The state of the economy in China is particularly important to Australia as it is the nation's second-largest export customer, with minerals making up the bulk of exports.
Miner Rio Tinto rose 5.2 percent to A$45.75 while rival BHP Billiton Ltd rose 4.4 percent to A$28.31.
Oil producers gained after the price of oil settled nearly 9 percent higher. Woodside Petroleum Ltd rose 1.5 percent to A$34.20 while Santos gained 1.4 percent to A$14.68.
CAUTION REMAINS
Other analysts noted an underlying tone of caution in The Australian market amid worries over the economy.
"We do need to see some more stability in the banking system in the U.S. before we get a genuine rally on any market," said David Taylor, market analyst at CMC Markets.
Economic indicators in Australia the past two days have also bought little cheer, with gross domestic product falling unexpectedly in the fourth quarter while building approvals fell in January for the seventh straight month. For more see [ID:nSYD446936]
Building materials maker Boral Ltd slipped 2 percent to A$2.50 and CSR Ltd shed 2.9 percent to A$1.02. Lihir Gold Ltd fell 7 percent to A$3.08 after the miner raised $325 million in a share placement at A$3 a share. For more see [ID:nSYU006158]
