Australia: Shares hit 5½ wk high on strong China markets, bargain hunting

[SYDNEY] Australian shares rose to a 5½ week high on Thursday as investors took heart from gains on Wall St and sought bargains in mining and energy stocks following months of heavy selling.

A three per cent gain on China's mainland stock markets as they resumed trading after a week-long break also helped boost Australian shares.

The S&P/ASX 200 index rose 0.3 per cent or 16.3 points to 5,204.2 by 0145 GMT, its fourth consecutive day of gains and touching its highest intraday level since Aug. 31. The index is still down about 4 per cent for the year so far. "It appears that we've got a bit of a virtuous circle going," said CMC Markets chief strategist Michael McCarthy. "The calmer market is lifting confidence, which brings buying, and that buying lifts the market and calms (investors), which in turn brings more confidence." Miners rose as investors sought to buy on the cheap in a sector which has been heavily battered in 2015 as a result of slowing China demand and tumbling commodity prices. BHP Billiton added 3 per cent, rival Rio Tinto firmed 1.6 per cent and BHP spin-off South32 jumped 6 per cent on bouncing commodities prices.

Energy companies, which also have followed the oil price lower this year, rebounded. Origin Energy added 3.3 per cent, Santos rallied 5 per cent and Papua New Guinea-focused takeover target Oil Search nudged up 0.3 per cent.

Regional lender Bank of Queensland led financials higher, up nearly 7 per cent after reporting a record full year profit.

Australia and New Zealand Banking Group gained 1.3 per cent after selling its car finance unit to Macquarie Group , which was on a trading halt.

Among retailers, No. 1 grocer Woolworths was up 1 per cent while rival Wesfarmers, owner of Woolworths rival Coles, fell about the same amount.

New Zealand's benchmark NZX 50 index rose 0.3 per cent or 18.02 points to 5,568.05, taking its gains to 1.3 per cent so far this week.

Technology and infrastructure stocks were the biggest gainers. Software developer Xero rose 3 per cent to an eight-week peak, having bounced 33 per cent since late August.

Air New Zealand jumped 2.7 per cent to its highest since late August after the company said it expected to almost double pre-tax profit in the first half of the 2015-16 financial year.

Resins manufacturer Nuplex Industries dropped nearly 1 per cent after running into profit taking.

REUTERS