Aussie market climbs 1.5pc

MELBOURNE - The Australian share market advanced 1.5 per cent to a fresh 11-month high, driven by banks and resources stocks, and the expiry of derivatives contracts.

At 1615 AEST, the benchmark S&P/ASX200 index was up 70.4 points, or 1.51 per cent, at 4734.1 while the broader All Ordinaries rose 69.9 points, or 1.5 per cent, to 4741.

Both indices closed at their highest levels since October 2, 2008.

On the Sydney Futures Exchange, the December share price index contract gained 58 points to 4745, on a volume of 21,392 contracts.

Bell Potter Securities' senior client adviser Stuart Smith says "the market is defying gravity" and remains bullish with over $4.7 billion in turnover at the market close.

The market was driven by the expiry of derivatives, with fund managers and big brokers participating while small investors remained on the sidelines, he said.

"We just seem to stumble from one derivative expiry to the next," he said.

"Tomorrow is options expiry day and the most popular strike price for BHP (Billiton) is $38 so it is staying in excess of $38 for the purpose."

Telstra shares were also affected by options expiring, he added.

The telco's shares lost one cent to $3.27 on turnover of over $60.4 million.

Last Thursday, the share price index contract expired.

BHP Billiton, Rio Tinto, Woodside Petroleum and the big four banks were also pushing the market higher, Mr Smith said.

BHP Billiton shares finished 35 cents higher at $38.35, Rio Tinto jumped $1.38 or 2.29 per cent to $61.74 and Woodside Petroleum surged $2.57 or 5.09 per cent to $53.11.

Banks advanced, with Commonwealth Bank shares rising $1.13 or 2.31 per cent to a 19-month high of $50.00.

"That was really a standout," Mr Smith said.

By 1625 AEST Woodside's competitors had advanced, with Oil Search rising 20 cents to $6.52a and Santos up seven cents at $15.15.

Gold stocks were higher also, with Lihir Gold leading the sector and gaining eight cents, or 2.67 per cent, to $3.08.

Newcrest Mining added 67 cents to $34.34 and dual-listed Newmont Mining Corporation put on seven cents to $5.20.

At 1634 AEST the spot price of gold in Sydney was trading at US$1015.00 per fine ounce, up US$6.25 from Tuesday's closing price of US$1008.75 per fine ounce.

Shares in explorer Southern Gold Ltd leaped two cents, or 21.05 per cent, to 11.5 cents after it said indications were good for a large gold discovery at its prospect in South Australia's far west.

Retailers were mixed, with surfwear company Billabong gaining 33 cents to $11.15, department store owner David Jones advancing 16 cents to $5.66 and The Reject Shop losing 20 cents to $13.10.

Woolworths put on 46 cents to $29.26 and Wesfarmers gained 58 cents to $26.77.

By 1642 AEST media stocks were mixed, with Fairfax Media surging 7.5 cents, or 4.63 per cent, to $1.695.

Fairfax chairman Ron Walker said he was inclined to step down from the position at the company's annual general meeting in November if that was what shareholders wanted.

News Corporation fell nine cents to $16.46 and its non-voting scrip backtracked two cents to $14.15.

Qantas firmed one cent to $2.84 and Virgin Blue Holdings added 1.5 cents to 42 cents.

The top traded stock by volume was Boart Longyear, with 172.29 million shares worth $54.5 million traded

. Boart's shares closed 1.5 cents, or 4.92 per cent, higher at 32 cents.

Preliminary national turnover reached 2.9 billion shares, worth 4.79 billion, with 771 stocks up, 434 down and 288 steady.

- AAP