Aussie stocks continue dream run

SYDNEY - The Australian share market has posted its largest monthly gain in almost 16 years on the back of a resurgent financial sector.

The S&P/ASX200 index rose by 7.3 per cent over July, the largest monthly gain since December 1993.

At the 1615 AEST close on Friday, the benchmark S&P/ASX200 index was up 53.6 points, or 1.28 per cent, on the day to 4,244 points, while the broader All Ordinaries index added 53.6 points, or 1.28 per cent, to 4,249.5.

On the Sydney Futures Exchange, the September share price index contract was 43 points higher at 4,206 points on 25,823 contracts.

July marked the fifth consecutive month of gains, and the strongest five-month run in just over 20 years.

Burrell Stockbroking director Richard Herring said the financial sector provided the impetus for the market on Friday, and for the month.

"The standout sector again is the financials, which is bursting. They're really providing the impetus for the market," Mr Burrell said.

On Friday National Australia Bank rose 56 cents, or 2.36 per cent, to $24.33, ANZ gained 79 cents, or 4.45 per cent, to $18.53, Commonwealth Bank increased $1.18, or 2.84 per cent, to $42.80 and Westpac added 32 cents, or 1.5 per cent, to $21.69.

Mr Burrell said stability had returned to the sector after NAB's capital raising, which was likely to be the last among the banks after a run of balance sheet repairs.

"There is also probably a more positive outlook from the market generally. Rather than looking for a reason why things would perhaps go down, it's looking for reasons why things might go up," he said.

The US corporate earnings season was also a positive influence over the month, with results showing many analysts were overly conservative with their estimates, Mr Burrell said.

"A lot of the reports have been not only ahead of estimates, but well ahead of estimates," he said.

"I think the market may be assuming analysts out here might be the same, in the sense that they underestimated the resilience of some of the companies that are operating in the economy."

The local reporting season ramps up in August.

Resources stocks were higher following stronger commodity prices on Friday.

BHP Billiton gained 70 cents, or 1.88 per cent, to $37.85 and rival Rio Tinto added $2.30, or 3.96 per cent, to $60.40.

In the energy sector, Woodside Petroleum added $1.21 to $45.70, Oil Search gained 11 cents to $5.64 and Santos rose 13 cents to $14.52.

Origin Energy said on Friday it achieved record production and sales in 2008/09, with reserves up strongly.

Origin shares closed up 12 cents to $14.50.

Also making news, QBE Insurance Group bought the insurance business and an equity stake in rural services provider Elders for $315 million.

QBE shares dropped 27 cents to $19.50, while Elders share soared 10.5 cents, or 38.18 per cent, to 38 cents.

Property owner GPT Group has moved to exit an offshore joint venture with failed investment firm Babcock & Brown and focus on its Australian property portfolio.

Its shares lost two cents to close at 53 cents.

Domino's Pizza Enterprises forecast its annual profit to grow by up to 30 per cent after consumers turned to affordable fast food during the downturn.

Domino's added 20 cents, or 5.88 per cent, to $3.60.

At 1632 AEST the spot price of gold in Sydney was US$938.65 per fine ounce, up US$7.70 on Thursday's close of US$930.95.

Lihir added two cents to $2.77, Newcrest was flat at $30.00 and Newmont dropped one cent to $4.80.

Telstra shares fell after their strong gains on Thursday, closing on Friday down nine cents at $3.53, while Optus parent Singapore Telecommunications dropped six cents to $2.80.

A rare area of weakness on Friday was the retail sector. Coles owner Wesfarmers lost 36 cents to $25.85 and Woolworths dropped 10 cents to $27.25.

The most-traded stock by volume was Telstra, with 118.6 million shares worth $413.4 million changing hands.

Preliminary market turnover was 2.72 billion shares worth $8.2 billion, with 693 stocks up, 379 down and 314 unchanged.

- AAP