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Australia: Shares bounce as investors pick up bank bargains

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[SYDNEY] Australian shares rose on Monday as investors swooped on bank stocks made cheap by months of declines, while a lower oil price stoked hopes that transport companies will benefit from reduced costs.

Encouraging US economic figures released late last week also revived hopes of a rate hike in 2015, driving up the US dollar and making Australian companies even cheaper.

By 0235, the S&P/ASX 200 index was up 0.8 per cent or 40.4 points at 5,082.5. The benchmark is still down more than 2 per cent this month and down 7 per cent so far this quarter. "It's a lot of reacting to oversold banks," said Heuristic Investment Systems founder Damien Hennessy. "The market's still down a fair way for the quarter so it's probably a little bit of bargain buying around these levels. Yield is still a key factor."

Banks led the gains, having declined nearly 20 per cent since March as lenders sell assets and hold large share issues to meet tough new rules forcing them to keep more cash on hand.

Commonwealth Bank of Australia was up 1.8 per cent, while National Australia Bank, Westpac Banking Corp and Australia and New Zealand Banking Group were up about 1.5 per cent.

Logistics and transport firms also fared well. Brambles was up 2.3 per cent and Qantas Airways added 2 per cent.

Energy retailer AGL firmed 3.7 per cent as investors warmed to a series of statements detailing its plans to overhaul the heavily-polluting business and sell only renewable energy.

Internet provider M2 jumped 13 per cent, the biggest gainer in the benchmark index, after saying it plans to sell its shares to smaller rival Vocus Communications, down 6 per cent.

The big miners lost ground as the prices of key commodities such as iron ore remained near multi-year lows on concerns about slowing demand from top buyer China.

BHP Billiton was off by 1.1 per cent and rival Rio Tinto dipped 1.6 per cent. Gold major Newcrest skidded 2.2 per cent as expectations of a US rate hike sent investors switching from gold into US dollars.

New Zealand's benchmark NZX 50 index edged up 0.1 or 7.6 points to 5,694.96 following a sluggish lead from Wall Street.

Clothing retailer Kathmandu rose about 2 per cent while New Zealand securities exchange NZX also jumped 2 per cent.

The infrastructure sector came under pressure with utility Meridian Energy off 5 per cent to hit a two-week trough, while telecom company Spark was down 0.7 per cent.

REUTERS