Aussie shares close at five-week high

SYDNEY- Australian shares closed at a five-week high, up one per cent on the day, after record gold prices led to a rally by miners of the precious metal.

The benchmark S&P/ASX200 index closed up 43.4 points, or 0.92 per cent, at 4,762.4, the highest since October 26, while the broader All Ordinaries index gained 43.6 points to 4,776.7.

On the Sydney Futures Exchange, the December share price index futures contract was 42 points higher at 4,769 points, on a volume of 24,862 contracts.

"The gold price is strong and the gold theme is continuing," Wilson H™ client adviser Joseph Pagliaro said.

"I think it started with fears of inflation but now its become a momentum trade."

By 1614 AEDT, the spot price of gold in Sydney was US$1,212.30 per fine ounce, up US$32.88 on Tuesday's closing price of US$1,179.42. During the day, it reached a record high US$1,213.50.

Lihir Gold gained 15 cents, or 4.19 per cent, to $3.73 and Newcrest added $1.86, or 4.97 per cent, to $39.26.

Sino Gold jumped 47 cents, or 5.94 per cent, to $8.38 after the company's shareholders voted in favour of the miner being bought by Canada's Eldorado Gold.

Other miners also gained on higher metals prices.

Aquarius Platinum added 33 cents, or 5.06 per cent, to $6.85, OZ Minerals increased 5.5 cents to $1.25 and Iluka rose 15 cents to $3.67.

The big miners also rose. BHP Billiton, strengthened 58 cents to $41.92 and Rio Tinto gained $2.14 to $73.54.

BlueScope Steel was up eight cents at $2.90 after saying it would boost capacity at its plant in Indonesia. Fellow steel producer OneSteel added six cents to $3.12 and Sims Metal increased 81 cents to $21.80.

The major banks added their weight to the market gain, led by Commonwealth Bank, which increased 85 cents to $54.70.

Mr Pagliaro said risk appetite was coming back.

"It'll be interesting to see whether it pushes it through 5,000 before Christmas," he said of the All Ordinaries index.

A weaker real estate sector bucked the general upwards trend.

Westfield slipped 22 cents, or 1.79 per cent, to $12.05, GPT fell 1.5 cents to 58.5 cents and Mirvac lost 4.5 cents to $1.485.

"I would highlight the fact that they've had a good run and they tend to get sold if there are any sort of credit fears out there," Mr Pagliaro said about Mirvac.

Investors were reminded that debt is still a problem when Dubai's major state-owned company said on Friday that it was asking to delay loan repayments.

In company news, Perpetual shed 28 cents to $32.50 as the fund manager reaffirmed first-half profit guidance.

Macarthur Coal gained 19 cents, or 2.08 per cent, to $9.34 as it said coal sales had recovered following the global financial crisis, with steel production increasing.

Telstra added five cents to $3.49 after announcing the sale of the telco's 51 per cent stake in Chinese real estate website business SouFun Holdings, when the business floats on the Hong Kong stock exchange.

Seven Network slipped six cents to $6.40 after the broadcaster lost its bid to appeal a judgment in an earlier case against a raft of media, telco and sporting parties related to the 2002 demise of its pay-Television sports channel, C7.

Pharmaxis jumped 27 cents, or 11 per cent, to $2.76 after the drugs developer said that a second six-month dosing trial of Bronchitol in people with cystic fibrosis had achieved significant results.

Caltex Australia dropped 13 cents to $9.47 after the competition watchdog knocked back the refiner's attempted purchase of 302 Mobil service stations because it would probably lead to higher retail fuel prices.

Metal Storm was steady at 2.5 cents after the weapons developer said it still had not received initial funds promised under a US$35 million (A$37.85 million) investment deal with Assure Fast Holdings.

The most traded stock by volume was investment firm Future Corporation, with 122.4 million shares worth $774,432 changing hands.

Future Corporation lost 0.1 cent to 0.7 cent.

Preliminary market turnover was 2.74 billion shares worth $5.39 billion, with 662 stocks up, 467 down and 331 unchanged.

- AAP