Resources keep shares in the black

The sharemarket rallied in afternoon trading to close marginally higher after some heavy lifting by the big miners offset jitters among the financials.

The ASX200 was 6.3 points higher at 5,290, while the broader All Ordinaries gained 9.9 points to 5,418.8.

A Macquarie Equities private client adviser, Helen Spencer, said the flat close hid "a tale of two markets".

"You've got the industrials, particularly the financials, being offset by a very robust resource sector," she said.

Among the industrials, the world's largest supplier of pallets, Brambles, was a standout performer, defying concerns that its exposure to soaring fuel costs would dent earnings.

Brambles yesterday confirmed that it was looking forward to solid earnings growth this year and next, with a strong pipeline of contract wins.

"The higher fuel cost hasn't been biting as hard as maybe the market was fearing," Ms Spencer said.

Brambles shares closed 67c higher at $8.15.

The big banks were in retreat, with Commonwealth Bank shedding $1.10, to close at $38.60, ANZ down 65c, to $17.95, National Australia Bank down 14c, to $26.41, and Westpac down 47c, at $20.20.

The fifth-largest bank, St George, lost 77c, to $27.35.

Weaker prices in most metals in London were overshadowed by news that Rio Tinto had settled on a record iron ore price following contract talks with the Chinese steelmaker Baosteel. Rio shares rose $4.17 to $141.75.

BHP Billiton gained $1.28, to $45.88, before a London briefing by its chief executive, Marius Kloppers, on the steelmaking materials business.

Shares in the power generator and retailer Origin climbed 90c to $16.42 after the British energy group BG renewed its $15.50 per share offer. The off-market bid values the Australian company at $13.8 billion.

Shares in Qantas fell below $3 for the first time in two years during intra-day trading. The airline is facing a stand-off with unions over wage demands, as well as rising fuel costs.

After falling as low as $2.95, Qantas shares eventually closed 1c down at $3.02.

Its rival Virgin Blue took heavier losses, giving up 2.5c to finish at 52.5c.

Oil prices in London and New York ended higher on Monday, supporting the local energy stocks.

Santos finished 40c higher at $21.40, Oil Search gained 15c to $6.43 and Woodside Petroleum added $1.14 to $66.14.

The gold producers were mixed: Lihir Gold gained 2c, to $3.10, and Newmont added 10c, to $5.20. Newcrest dropped 84c, to $26.36.

US stocks had closed mixed on Monday following heavy losses at the end of last week as investors waited for the outcome of an interest rate policy meeting at the Federal Reserve, which is being held in the midst of troubled economic times. The Dow Jones Industrial Average ended down 0.33 points, at 11,842.36.

Among the retailers, Woolworths gained 18c, to $24.67, Wesfarmers, which own Coles, lost 21c, to $38.83, and the department store David Jones was down 5c, to $2.88.

The top traded stock by volume was Empire Oil & Gas, with 61.32 million shares worth $1.36 million changing hands. Its shares fell 0.2c to 2.2c.

Preliminary market turnover was 1.90 billion shares worth $6.41 billion.