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Australia: Shares slightly higher as iron ore slump offsets US fervour

Wednesday, December 24, 2014 - 10:19
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Australian shares edged higher on Wednesday as investors took a breather in a shortened Christmas Eve session and falling iron ore prices undercut an upbeat lead from Wall St trading at a record high.

[SYDNEY] Australian shares edged higher on Wednesday as investors took a breather in a shortened Christmas Eve session and falling iron ore prices undercut an upbeat lead from Wall St trading at a record high.

Overnight, US stocks rose for a fifth straight session with the Dow climbing above 18,000 for the first time ever after an unexpectedly strong report on economic growth.

A day earlier, Australia slashed its price forecast for iron ore, the key commodity in a resources boom, by a third for 2015, foreshadowing a global supply glut which would drive down prices. "The US continues to trade into record highs but we're lagging the to an extent," said IG Markets strategist Stan Shamu. "The banks are starting to come back to life but resources remain the great unknown because key commodity prices are struggling." After drifting between negative and positive territory, the S&P/ASX 200 index was up 11.68 points or 0.2 per cent at 0126 GMT.

Insurer QBE, which has significant interests in the US, led large financials higher, gaining 0.9 per cent, while National Australia Bank rose 0.5 per cent and Australia New Zealand Banking Group added 0.1 per cent.

Mining giant Rio Tinto firmed 1.3 per cent while iron ore rival BHP Billiton gained 0.6 per cent.

Grocer Woolworths added 0.4 per cent and Wesfarmers , which owns Woolworths rival Coles, rose 0.7 per cent.

Telecommunications company Telstra slipped 0.8 per cent as analysts questioned the benefit of its purchase of undersea cable firm Pacnet for US$697 million.

New Zealand's benchmark NZ50 share index closed 5.32 points higher at an all-time closing high of 5,557.42 after a shortened session as the index followed offshore markets higher in holiday-thinned trade.

Gains were limited with investors wary of taking on big positions ahead of the year-end holiday season. New Zealand markets will be closed for Christmas and the Dec 26 Boxing Day holiday.

Outdoor clothes retailer Kathmandu rose 1.9 per cent to NZ$2.14 (US$2) as investors picked up cheap shares after they plumbed a near two-year low a day earlier following a warning of weak sales.

Further gains were capped, with other shares easing as investors rebalanced their portfolios after a broad-based rally seen earlier this week on the view that New Zealand's economy will remain strong even as growth momentum eases.

REUTERS