Banks help shares bounce back

The Australian share market recovered from its earlier losses but still closed marginally in the red, taking its lead from a rout on Wall Street on Friday.

The benchmark S&P/ASX200 index was down 4.6 points, or 0.09%, at 5283.7, while the broader All Ordinaries fell 2.9 points, or 0.05%, to 5408.9.

The September share price index futures contract dropped 21 points to 5288.

CMC Markets senior dealer Dominic Vaughan said the local market pared back losses in afternoon trading, with a recovery in the financial sector.

"We were down around 60 points at some stage, but we're closing down about five points.

"I think, if anything, you're probably looking at a recovery in stocks like Woolworths and the financial sector - that has given us a little bit of momentum back to the upside.''

Mr Vaughan said energy stocks helped to lift the market today.

"The energy sector continues to be relatively well bid, Woodside Petroleum and some of the gas stocks are well bid.''

National Australia Bank gained 80 cents, or 3.11%, to $26.55, Westpac was up 4 cents to $20.67, Commonwealth Bank of Australia added 34 cents to $39.70 and St George added 15 cents to $28.12. ANZ lost 18 cents to $18.60.

Among the retailers, Woolworths gained 32 cents to $24.49, while Wesfarmers, the owner of rival Coles, added 4 cents to $39.04.

The big miners closed weaker, with BHP Billiton down 5 cents to $44.60 and takeover target Rio Tinto off $1.02 to $137.58.

In the US oil prices shot up 2% to $US134.70 a barrel on Friday night on Middle East tensions and a weak dollar, compounding already elevated fears about inflation and consumer spending.

Local oil stocks closed higher, with Santos up 60 cents, or 2.94%, to $21.00, Oil Search up 17 cents to $6.28 and Woodside Petroleum adding $2.07 to $65.00.

Aurox Resources 1 cent to 86 cents after nnouncing it had secured port access at Port Hedland in Western Australia.

Making news today, Babcock & Brown (B&B) is in the sights of US private equity firm Kohlberg Kravis Roberts, according to a British newspaper report. B&B closed down 35 cents to $6.07.

Also making news, fund manager Valad Property Group has downgraded its earnings outlook for the current year but expects to regain growth in the 2009 fiscal year. Valad fell 5 cents to 78.5 cents.

At 4.42pm, the spot price of gold in Sydney was $US906.80, up $US4.45 on Friday's Sydney close of $US902.35.

Lihir Gold gained 8 cents $3.08, Newmont Mining Corp increased 3 cents to $5.10 and Newcrest Mining was down 1 cent at $27.20.

In the media sector, News Corp dropped 36 cents to $17.59 and its non-voting shares shed 48 cents to $17.10.

Consolidated Media picked up 1 cent to $3.17, while Seven Network fell 12 cents to $7.43 and Ten Network dropped 6.5 cents to $1.455.

The aviation sector closed weaker, with Qantas off 6 cents to $3.03 and Virgin Blue Holdings down 5 cents, or 8.33%, to 55 cents.

ABC Learning Centres closed down 7 cents to 66 cents after its boss, Eddy Groves, said he was not profiting from increased standardised daily childcare fees across the company's centres in Australia.

The top traded stock by volume was Union Resources, with 87.67 million shares worth $2.85 million changing hands.

Preliminary market turnover was 1.81 billion shares worth $5.61 billion, with 386 stocks rising, 985 falling and 310 unchanged.