Australian stocks: Market closes over 2pc up

SYDNEY- The Australian share market closed over two per cent higher on Monday driven by stronger financial stocks that benefited from expectations of a new US policy to clean up bad American bank debt.

Stronger resources and energy stocks also drove the market higher.

The benchmark S&P/ASX200 added 84.5 points, or 2.44 per cent, to close at 3,550.3, while the broader All Ordinaries gained 78.1 points, or 2.29 per cent, to 3,483.1.

At 1615 AEDT, the Sydney Futures Exchange June share price index contract was trading up 69 points at 3,556 on a volume of 21,139.

Burrell Stockbroking associate Peter Wright said the day's gains were encouraging, particularly with US futures fairly mute despite expectations of a move to free up US financial markets.

US Treasury Secretary Timothy Geithner is expected to release details of a US$500 billion (A$725.06 billion) federal program to remove troubled assets from bank balance sheets on Monday, US time.

"It's certainly taken me by surprise, I though we might be up but not by 80 points," Mr Wright said of the market rally.

"The US would want to perform well tonight or we'll be giving it all back tomorrow.

"But I think it's a significant shift. Three months ago we'd be off 100 points anticipating that regardless of what was going to be said it would be bad. So that's something."

Banking stocks benefited from the anticipation of US Treasury plan.

Commonwealth Bank rose $1.08, or 3.18 per cent, to $35.08, National Australia Bank gained 67 cents, or 3.5 per cent, to $19.79, ANZ lifted 70 cents, or 4.81 per cent, to $15.25 and Westpac added 78 cents, or 4.29 per cent, to $18.95.

The major miners were helped by gains in Asian markets.

BHP Billiton gained $1.14, or 3.54 per cent, to $33.32 and Rio Tinto added $3.68, or 7.85 per cent, to $50.53.

The local gains come despite falls on US markets last Friday, where the Dow Jones industrial average fell 122.42 points, or 1.65 per cent, to 7,278.38.

The S&P 500 index fell 15.5, or 1.98 per cent, to 768.54, and the Nasdaq composite index fell 26.21, or 1.77 per cent, to 1,457.27.

Among the energy stocks, Woodside was up $1.04 to $38.46, Santos added 46 cents to $15.96 and Oil Search rose nine cents to $5.16.

Gold stocks were mixed. Newcrest lost 44 cents to $33.66, Lihir rose two cents to $3.40 and Newmont added 19 cents to $6.39.

At 1621 AEDT the spot price of gold was US$952.88 an ounce, down US$4.62 on Friday's local close of US$957.50.

Telstra was another strong performer, adding 12 cents, or 3.96 per cent, to 3.15.

Rival Optus parent Singapore Telecommunications was flat at $2.35.

Making news, Drugs maker and distributor Sigma Pharmaceuticals said it expects to deliver modest earnings growth this fiscal year, after reporting a 3.9 per cent rise in annual profit.

Sigma shares added three cents, or 3.12 per cent, to 99 cents.

Straits Resources Ltd said it was well placed for acquisition opportunities after selling a stake in its coal assets to Thailand's PTT International Company Ltd for US$335 million (A$485.79 million).

Straits shares are in a trading halt, and last traded at $1.15.

OZ Minerals shares are also in a trading halt, at 59 cents, ahead of a decision by the Foreign Investment Review Board (FIRB) about whether to allow a $2.6 billion takeover by Chinese state-owned Minmetals Non-ferrous Metals Company Ltd.

GPT Group was the most traded stock, with 78.45 million shares changing hands, worth $24.96 million.

GPT shares were up four cents, or 13.79 per cent, at 33 cents.

Preliminary market turnover was 1.46 billion shares worth $3.19 billion, with 534 stocks rising, 382 falling and 280 unchanged.

- AAP