Australia shares turn higher as China bounces; NZ inches up

[BENGALURU] Australia shares reversed course to end higher on Tuesday as Chinese equities rose on fresh attempts by Beijing to stabilize its markets, though underlying sentiment remained fragile in an environment of heightened volatility in global financial markets.

Broad-based gains pushed the S&P/ASX 200 index 1.3 per cent, or 76.900 points, higher to 5,805.100 at close. That extended a 1.1 per cent rise for the benchmark on Monday.

Earlier, China's securities regulator said it would encourage share buybacks, mergers and acquisitions by listed firms, and would enhance market liquidity, in the latest attempt to put a floor under the country's skidding equity markets.

Moreover, Bloomberg reported that U.S President Donald Trump had predicted a "great" deal with China in an interview on Fox News' Laura Ingraham Show. That came after Wall Street was spooked overnight by a separate Bloomberg report, which quoted Trump as saying Washington is preparing to announce tariffs on all remaining Chinese imports.

The latest Fox News report, however, appeared to take precedence for the Australian dollar - a proxy for China-related trades and a gauge of broad risk appetite - which added 0.5 per cent by 0619 GMT.

"The Chinese markets seem to be reversing course from steep losses recently. That's definitely welcome news and there's been a spill over from the Chinese stocks performance, especially in metals." said James McGlew, executive director of corporate stockbroking at Argonaut. The metals and mining index gained 1.6 per cent, with global miner BHP rising 1.8 per cent, while Rio Tinto Ltd closed 2.4 per cent higher.

China is Australia's largest trading partner and a big buyer of its key resources exports. The financial stocks also underpinned the gains, closing 1.7 per cent higher.

McGlew said financials were also benfitting from bargain hunting as they were "too attractive to ignore."

National Australia Bank Ltd rose 0.6 per cent and Commonwealth Bank of Australia gained 2.3 per cent at close.

Banks also seemed to have caught a break as the Reserve Bank of Australia's Assistant Governor Michelle Bullock said that the transition to higher capital levels was coming to an end for major banks.

McGlew said the move would allow banks to enjoy more flexibility with their balance sheet which could improve their growth profile.

New Zealand's benchmark S&P/NZX 50 index added 0.4 per cent or 32.84 points to finish the session at 8,648.38.

Financial market operator NZX Limited was the biggest per centage gainer, rising 2.9 per cent.

REUTERS