Shares end losing streak

The Australian share market has broken a six-trading-day losing streak to end today well over the 5000-point barrier as bargain hunters rejoined the banks and resources sectors after Wall Street bounced overnight.

The bears watched from the sidelines as the benchmark S&P/PASX200 index edged back above the psychological 5000-point level.

The S&P/ASX200 index gained 83.8 points, or 1.68%, to 5082.1 while the broader All Ordinaries added 76 points, or 1.49%, to 5170.

The September share price index futures contract rose 89 points to 5089 on a total volume of 23,131 contracts.

CMC Markets senior dealer Dominic Vaughan said resources and energy stocks recovered lost ground, while financial stocks also found support.

"Traders saw the opportunity to re-enter energy and resource sectors after yesterday's heavy losses with BHP Billiton, Rio Tinto and Fortescue Metals,'' Mr Vaughan said.

Mr Vaughan said BHP attracted a lot of attention due to stronger iron-ore price agreements.

BHP Billiton advanced 88 cents, or 2.21%, to $40.70 and Rio Tinto firmed $3.75, or 3.08%, to $125.70.

Both stocks fell more than 7% yesterday.

In other mining news, iron ore miner Murchison Metals said it could not explain unusual trading in its shares over the past week.

Murchison's share price has been volatile of late, sinking 13.24% on June 30 to $2.95 from $3.40 the previous day, then rising 6.78% to $3.15 on July 1.

Murchison said it continued to work on its proposed merger with fellow iron ore miner Midwest Corporation. Murchison shares closed up 4 cents at $3.00.

Mr Vaughan said banks were in focus again, but for the "right reasons'' this time.

"Bank stocks climbed for the second consecutive day as investors bought into the financial sector on perceived value,'' Mr Vaughan said.

The Commonwealth Bank was up 98 cents to $42.33, NAB was up $1.06 to $27.54 and ANZ rose 81 cents to $19.52 and Westpac added 61 cents to $20.30.

St George was up 77 cents to $26.77 after it increaased its standard variable home loan rate by 0.2 percentage points to 9.67%.

Australia's fifth-largest bank attributed the rise to the continuing high cost of the funds it sources.

Babcock & Brown was up 32 cents to $7.28 and Macquarie Group advanced $1.57 to $48.63.

Meanwhile, Insurance Australia Group could soon announce write-downs from its British operations of up to $200 million, which may force it to cut its final dividend.



IAG shares fell 4 cents at $3.69 on the speculation but other insurers gained.

Suncorp-Metway rose 15 cents to $12.65, while QBE Insurance Group gained 79 cents at $22.48.

US equity markets were mixed overnight in the lead-up to the July 4 long weekend.

The Dow Jones industrial average and the S&P500 initially fell but managed to finish higher on better-than-expected jobs data and record oil prices that boosted energy stocks.

Oil rose to a record high on signs of strong demand from China, with crude oil for August delivery climbing to more than $US145 per barrel in New York overnight.

Local energy stocks were mixed, with Woodside dropping $1.35, or more than 2%, to $61.75.

Santos gained 14 cents to $19.95 and Oil Search added 2 cents to $6.05.

Origin Energy, Australia's second-largest power retailer, formally rejected a $13.7 billion takeover bid from BG Group, and its shares ended 13 cents cheaper at $16.15.

Babcock & Brown Power surged 12 cents, or 18.18%, to 78 cents after selling one of its power stations to Origin Energy to pay down debt.

At 4.27pm the spot price of gold was $US934.45, down $US10.45 from last night's Sydney close of $US944.90.

The precious metal producers were all lower, with Newcrest dipping 2 cents to $29.98, while Newmont lost 3 cents to $5.17 and Lihir fell 8 cents to $3.14.

Beadell Resources has abandoned plans to acquire Newcrest Mining's Cracow gold project in Queensland after an equity raising to fund the purchase was unsuccessful due to tough market conditions.

Beadell's shares were hammered on the news, sinking 12 cents, or 30%, to 28 cents.

The retailers found support, with Woolworths picking up 30 cents to $23.40, David Jones adding 14 cents to $3.00 and Harvey Norman gaining 11 cents to $3.11.

Takeover target Just Group jumped 5.52% or 16 cents to $3.06 after it said it would not disclose more on its fiscal 2009 earnings outlook to its predator, Solomon Lew's Premier Investments.

Qantas gained 11 cents to $3.25, while rival Virgin Blue Holdings was up 1.5 cents to 49.5 cents after it announced its offshoot V Australia would add an extra service, between Brisbane and Los Angeles, from next year.

The top-traded stock by volume was Cluff Resources, with 79.5 million shares changing hands worth $1.62 million.

Preliminary national turnover was 1.37 billion shares worth $5.30 billion, with 669 stocks down, 491 up and 310 unchanged.

AAP