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[SYDNEY] Australian shares rose on Tuesday as rising United States index futures firmed while Woodside Petroleum's $8 billion takeover approach for Oil Search boosted confidence in energy stocks overall.
Papua New Guinea-focused Oil Search said Woodside had made an approach just before the start of trade, sending its shares up as much as 17 per cent and prompting optimism about further takeover activity in a sector grappling with a low oil price.
Rival producer Santos, which said it was open to M&A activity last month as it reported the low oil price had hit profits, leapt 9 per cent.
Meanwhile, while US markets were closed for Labor Day on Monday, index futures were higher, suggesting Wall St will rise when trading resumes the following day.
By 0230, the S&P/ASX 200 index was up 52.6 points or 1.1 per cent at 5,083.0, its biggest percentage gain since Aug 27.
As Australian investors monitored wild swings on Chinese stock exchanges, the index has fallen 8 per cent in the past month with moves of more than 1 percent in 9 of the past 16 sessions. "The fact is with volatility where it is at the moment, a 1 per cent gain is neither here nor there," said IG Markets institutional dealer Chris Weston. "The M&A shows some of the big companies are prepared to look at some of the multiples," Mr Weston added, referring to Woodside's Oil Search approach. "That has been sending some positive signals." Woodside was down 3 per cent.
Iron ore majors BHP Billiton and Rio Tinto both gained about 2 per cent, while BHP spin-off South32 rose 4.2 per cent after the prices of some base metals advanced.
Banks were also higher as investors bought back into a sector which has been sold down heavily in 2015 amid tough new capital rules. Commonwealth Bank of Australia and Australia and New Zealand Banking Group were both up about 2 per cent, while Westpac Banking Corp and National Australia Bank were up 1 per cent.
New Zealand's benchmark NZX50 share index rose 44.36 points or 0.8 per cent to 5,617.09, pulling back from a two-week low the previous day, as telecommunications and healthcare-related shares boosted the market.
Telecommunications retailer Spark rose 2.3 per cent and network operator Chorus rose 1.6 per cent after a government report raised hopes of improvement in the country's broadband infrastructure. Ryman Healthcare rose 2.7 per cent as investors picked up shares in the retirement home operator which had fallen sharply during the market's sell-off in the past few weeks.