Australia: Shares close up 1.17 per cent

[SYDNEY] Australian stocks closed sharply higher on Thursday on the back of a surging Wall Street as fears over China gave way to bargain hunting.

The benchmark S&P/ASX200 index finished 1.17 per cent higher at 5,233.3, following a strong rally on US markets after a top Federal Reserve official said the case for a September rate hike had weakened.

Sydney shares fell to a two-year low this week, hit by fears about slowing growth in China - the world's number two economy and Australia's top trading partner - but fears eased as sharp gains in US stocks sparked a rally in Asia on Thursday.

"The ASX has seen its third day in a row of decent buying after declining more than 12 per cent in August," IG Markets' analyst Angus Nicholson said in a note.

"This is not totally surprising given the impetus from the excellent US trading session overnight and the fact that valuations have been knocked down to much more compelling levels." Among major Australian stocks, the Commonwealth Bank closed 0.39 per cent higher at A$76.43 while fellow banking giant Westpac rose 1.15 per cent to A$31.64.

Global miner BHP Billiton was also higher, jumping 0.50 per cent to A$24.06, but Rio Tinto fell 0.16 per cent to A$48.81.

AFP