Australia: shares rise on soaring financials

[SYDNEY]  Australian shares rallied on Friday as reports that the country's biggest lender was shedding jobs to cut costs boosted financial stocks, pushing the benchmark to its biggest weekly gain in seven weeks.

The S&P/ASX 200 index rose 52.6 points, or 0.85 per cent, to 6,251.3 at the close of trade. The index rose 1.1 per cent over the week, its best performance since the week ended Feb 22.

Financial stocks surged 1.6 per cent after a lacklustre performance across the week. Top lender Commonwealth Bank of Australia rose 2 per cent to boost the benchmark.

Before markets opened, The Australian newspaper reported that Commonwealth Bank of Australia planned to cut more than 10,000 jobs to save costs and boost profitability.

"Markets are always looking for how the banks are going to grow their earnings and one suspects that a large amount of that is going to come from cost cutting," said Chris Weston, head of research at Pepperstone brokerage.

"Reducing the headcount by 10,000 will only boost the bottom line over a period of time. You could make an assumption that if CBA is cutting costs in this fashion, then there may be other banks that follow suit," he added.

All "Big Four" banks were higher, with Westpac Banking Corp rising 1.4 per cent, Australia and New Zealand Banking Group rising 2 per cent and National Australia Bank up 1 per cent.

Adding to the positive sentiment, the Reserve Bank of Australia (RBA) said stress tests indicate banks have sufficient capital to withstand double digit unemployment rates and housing price falls exceeding 30 percent.

"Overall, the financial system appears much better placed to respond to a range of challenges than it was a decade ago," it added.

Energy stocks also rose, with Woodside Petroleum gaining 1 per cent while Origin Energy advanced 0.7 per cent.

Capping gains on the index, mining stocks fell 0.4 per cent as investors took profit for a third session after a 1.7 per cent surge among miners on Monday.

Iron ore prices rose on the day, but stood shy of the strong gains notched earlier in the week amid lower production forecasts from major miners and robust demand from China.

New Zealand's benchmark S&P/NZX 50 index rose 0.02 per cent, or 1.73 points, to finish the session at 9,768.33, posting a weekly loss of 0.9 per cent to snap a nine-week winning streak.

Among top gainers, Spark New Zealand rose 2.1 per cent.

REUTERS