Australia: Shares surge on commodities, bargain bounce; NZ holds strong

[SYDNEY] Australian shares surged to a two-month high on Monday, as investors swooped on cheap stocks after months of heavy selling, and rebounding commodity prices lifted the mining sector while New Zealand stocks held near-record levels.

The S&P/ASX 200 index gained 46.475 points to 5,136.5 by 0205 GMT, its highest intra-day level since Jan. 6, and its sixth consecutive day of gains.

After a sombre start to 2016, the benchmark rallied 4.3 per cent last week, the largest weekly gain since October.

"We are witnessing an aggressive rally in underperforming stocks as opposed to strong buying in the quality names or long term, high conviction investing," said Matthew Felsman, a private wealth adviser at APP Securities Pty Ltd. "The recent buying is likely a combination of short covering by traders and underweight fund managers chasing a few battered stocks that can be perceived to be cheap."

Resources stocks led the market higher after iron ore climbed above US$52 a tonne to levels last seen in October, while copper prices climbed to their highest in four months.

The ASX 300 Metals & Mining Index rose nearly 4 per cent to its highest since November.

Fortescue Metals Group was the biggest gainer, up 12.6 per cent to flirt with a 2016 peak, while BHP Billiton leapt 5 per cent, while Rio Tinto put on 3.3 per cent.

Energy stocks also firmed, with Whitehaven Coal up 10.7 per cent and Beach Energy up nearly 8 per cent.

Banks also gained, recovering from a sell-off that has come from concerns that the housing sector is overheated.

Commonwealth Bank of Australia rose 1.3 per cent, Westpac Banking Corp and Australia and New Zealand Banking Group added 1.5 per cent and National Australia Bank is up 2 per cent.

Law firm Slater & Gordon clawed back 7 per cent after intense selling, that has seen its market capitalisation slump, since a series of profit warnings began last year.

New Zealand's benchmark S&P/NZX 50 index was flat after hitting record levels.

The index was up 0.1 per cent or 3.7 points at 6,421.83 during the morning trading, after hitting a record high of 6,426.57 on Monday.

The biggest gainers were Heartland Bank, which rose up 1.71 per cent and A2 Milk which is up 1.67 per cent. Health software company Orion Health Group gained 1.2 per cent.

Casino operator Sky City lost 0.88 per cent and Sky TV fell 0.90 per cent.

REUTERS