Australia: Shares hit 10-week high, ECB stimulus buoys demand

[SYDNEY] Australian shares jumped to a 10-week high on Friday as investors cheered a larger than expected economic stimulus package from the European Central Bank, which added to growing hopes of a domestic interest rate cut.

The death of Saudi king Abdullah encouraged investors to buy energy stocks amid speculation a change of leadership in the pivotal oil-producing nation might lessen a global supply stand-off that has been driving the commodity's spot price down. "The global easing phenomenon continues at an ECB level,"said IG Markets institutional dealer Chris Weston, referring to the ECB's launch of a bond-buying drive that will pump hundreds of billions of new money into the sagging euro zone economy. "We're seeing a situation where money has really no choice but flow into stocks." A surprise interest rate cut in Canada earlier in the week boosted speculation the Reserve Bank of Australia may follow suit, rather than raise rates as previously forecast, if key domestic economic figures disappoint, Weston added.

The S&P/ASX 200 index rose 73.3 points or 1.4 per cent to 5492.2 by 0144 GMT, its highest intraday level since Nov 12. Australian financial markets will be closed on Monday for the Australia Day holiday.

Oil producer Santos led energy stocks higher, gaining 6 per cent, while Woodside Petroleum added 2.3 per cent and Oil Search rose 2.5 per cent. Resources contractor Worley Parsons jumped 5 percent after winning a services contract in Canada.

Miners BHP Billiton and Rio Tinto gained 2 per cent and 1.4 per cent, respectively.

Smaller rival Arrium fell 3 per cent after cutting production targets and shutting a mine, while commodities logistics firms Qube Holdings and MACA slumped 3.5 per cent and 9 per cent because of concerns they will lose business as a result.

Among banks, Westpac Banking Corp, Commonwealth Bank of Australia and National Australia Bank all added 1 per cent.

New Zealand shares powered to a record high in early trading with the benchmark NZX-50 index rising 1.1 per cent to 5,708.91, wiping out the previous day's drop, as a weaker local currency drew buyers.

The biggest listed company Fletcher Building was up 1.3 per cent and telecommunications company Spark was 2.2 per cent higher.

High yielding power companies gained, with Contact Energy up 1.8 per cent at a near six-year high of NZ$6.77, while Mighty River Power, Genesis Energy and Meridian Energy were all up between 2 per cent and 3 per cent.

REUTERS