Shares close higher

The Australian share market rallied in afternoon trade to close marginally higher after some heavy lifting by the major miners offset jitters among the financials.

The benchmark S&P/ASX200 index was 6.3 points, or 0.12%, higher at 5290, while the broader All Ordinaries gained 9.9 points, or 0.18% to 5418.8.

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 its exposure to soaring fuel costs would dent earnings.

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

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

Brambles shares closed 67 cents, or 8.96%, higher at $8.15.

The big banks were in retreat, with the Commonwealth Bank losing $1.10 to $38.60, ANZ falling 65 cents to $17.95, NAB 14 cents worse at $26.41 and Westpac dipping 47 cents to $20.20. St George lost 77 cents to $27.35.

Weaker prices in most metals overnight in London were overshadowed by news Rio Tinto had settled on a record iron ore price following contract talks with Chinese steelmaker Baosteel.

Rio Tinto shares rose $4.17 to $141.75.

Its bigger rival BHP Billiton gained $1.28 to $45.88 ahead of chief executive Marius Kloppers briefing on steelmaking materials business in London.

At 4.15pm, the September share price index futures contract, had gained 28 points to 5305 on a total volume of 20,631 contracts.

Making other headlines today, shares in power generator and retailer Origin climbed 90 cents, or 5.8%, to $16.42 after British giant BG Group renewed its $15.50 per share offer.

The off-market takeover bid values the Australian company at $13.8 billion.

Shares in Qantas fell under $3 for the first time in two years during intra-day trading as the airline faced a stand-off with unions demanding wage increases and an ongoing battle to contain rising fuel costs.

Qantas shares closed 1 cent down at $3.02.

Rival Virgin Blue took heavier losses, losing 2.5 cents to end at 52.5 cents.

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

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

At 4.22pm the spot price of gold in Sydney was $US885.10, down $US21.05 on last night's close of $US906.15.

The gold producers were mixed, with Lihir Gold rising 2 cents to $3.10 and Newmont Mining rising 10 cents to $5.20, while Newcrest Mining was 84 cents worse at $26.36.

Overnight, US stocks finished mixed following heavy losses at the end of last week as investors waited for an interest rate policy meeting of the Federal Reserve amid troubled economic times.

The Dow Jones Industrial Average ended down a slight 0.33 points at 11,842.36.

Among the retailers, Woolworths gained 18 cents to $24.67, Wesfarmers, the owner of rival Coles, lost 21 cents to $38.83 and upmarket trader David Jones was down 5 cents 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 closed 0.2 cents lower at 2.2 cents.

Preliminary market turnover was 1.90 billion shares worth $6.41 billion, with 491 stocks rising, 813 falling and 389 unchanged.