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MELBOURNE - The battered Australian share market rallied today, rising more than five per cent as investors gained confidence from the government's emergency plan to protect the nation's banking system from a global financial meltdown.
The major banks made strong gains.
At the 1615 AEDT close, the benchmark S&P/ASX200 index was up 220 points, or 5.55 per cent, at 4180.7, while the broader All Ordinaries index rose 202.4 points, or 5.14 per cent, to 4141.9.
The December share price index futures contract added 161 points to 4214, on a volume of 43,949 contracts, according to preliminary calculations.
"The main action is in the financials on the back of the positive news coming out from the government and the concerted effort globally that they'll protect bank guarantees," Ord Minnett private client adviser Tony Chidiac said.
Mr Chidiac said there was no guarantee that the market would stay on positive turf.
"We've seen this before. The market's still very sceptical. Details (of the rescue plans) are yet to come out. We saw the futures (market) up quite substantially and then come off."
Mr Chidiac said Asian markets may not share Australian investors' optimism.
Over the weekend, Prime Minister Kevin Rudd announced a three-point plan that includes guaranteeing bank deposits for three years.
The plan will guarantee the borrowings of Australian banks in international credit markets and will extend a program to shore up the mortgage market through the purchase of an extra $4 billion of residential mortgage-backed securities.
The leaders of the 15 eurozone nations have also agreed to underwrite inter-bank loans and safeguard financial institutions from collapse.
Among the major banks locally, National Australia Bank jumped $1.60, or 7.69 per cent, to $22.40, Commonwealth Bank strengthened $2.65, or 6.7 per cent, to $42.20, and Westpac put on $1.81, or 8.96 per cent, to $22.00.
ANZ was $2.00, or 13.07 per cent, stronger at $17.30 as it was granted a licence from the State Bank of Vietnam to set up a wholly owned bank to be run out of Hanoi.
Banking and insurance group Suncorp-Metway shed 22 cents to $9.05 as it said it was assessing whether to sell its banking and wealth management operations, after the federal government took measures to stabilise the banking sector.
On Wall Street on Friday, the Dow Jones Industrial Average fell 128.00, or 1.49 per cent, to 8,451.19.
In the resources sector, global miner BHP Billiton improved $2.26, or 8.15 per cent, to $30.00 and Rio Tinto surged $6.36, or 8.71 per cent, to $79.36.
Fortescue Metals Group was 14 cents richer at $2.82 as it said its quest to become the alternative supplier of iron ore to the Chinese market had been boosted by jostling between rivals Rio Tinto and BHP Billiton, and by moves by Brazil's Vale to increase prices.
Oil and gas provider Woodside Petroleum was down 39 cents to $36.81 and Santos lost 13 cents to $12.21.
Nexus Energy shed 7.5 cents to 41.5 cents as it said it hoped to sell a stake in the Crux liquids project in Western Australia by the end of the year after Japanese group Mitsui pulled out of a planned purchase.
Among gold stocks, Newmont found four cents at $5.04, Newcrest picked up $1.85 at $27.49, and Lihir fell seven cents to $2.42.
The price of gold in Sydney at 1632 AEDT was US$858.65 per fine ounce, down US$55.85 on Friday's close of US$914.50.
Telco Telstra was up 19 cents at $4.09 and Optus-owner Singapore Telecommunications ascended 10 cents to $2.90.
In the retail sector, Woolworths was $1.36 better off at $26.36, and Wesfarmers, which owns Coles, sagged 53 cents to $21.22.
Among media stocks, News Corp was 20 cents weaker at $13.80 while its non-voting stock dropped 26 cents to $13.50.
Consolidated Media eased five cents to $2.05 and Fairfax stepped forward two cents at $2.55.
Among other stocks, property fund manager Valad Property Group lifted 1.2 cents to 9.5 cents as it withdrew its fiscal 2009 earnings guidance following the deterioration in the financial markets.
Property giant Stockland Corporation added 27 cents to $4.77 as it has expanded its domestic retirement business by buying Babcock & Brown Ltd's 14.4 per cent stake in Aevum Ltd for $26.9 million.
The top-traded stock by volume was Telstra, with 72.6 million shares worth $296.8 million changing hands.
Preliminary natonal turnover was 1.49 billion shares worth $5.36 billion, with 679 stocks up, 451 down and 270 unchanged.
- AAP
