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SYDNEY - The Australian share market closed higher, with financial stocks gaining ground followingCommonwealth Bank saying its interim profit would beat expectations.
However, the brokers said the government's $42 billion stimulus package would take its time to work through the economy, and the market came off earlier interday highs after the Reserve Bank of Australia cut interest rates by one percentage point.
At the 1615 AEDT close, the benchmark S&P/ASX200 index was up 11.3 points, or 0.32 per cent, at 3,508.7 while the broader All Ordinaries index was 5.6 points stronger, up 0.16 per cent, at 3,449.1.
On the Sydney Futures Exchange, the March share price index futures contract was eight points higher at 3,466 on a volume of 41,833 contracts.
The market drifted in afternoon trade following considerable gains earlier, and the Reserve Bank of Australia cut the cash rate by 100 basis points and the federal government announced its stimulus package.
IG Markets research analyst Ben Potter said investors knew it would take time for the government measures to reach the real economy.
"The package might help the economy prolong the onset of a technical recession, but looking further out, it looks like a matter of when and not if," Mr Potter said.
CBA led the gains, gaining $2.60, or 9.83 per cent, to $29.05, on the back of its guidance of a first half profit more than 20 per cent above consensus forecast.
"That's certainly had a positive flow on to the other banks," Macquarie Private Wealth adviser Helen Spencer said.
"It's been quite positive for the sector overall, and the financials in general."
Among other major banks, Westpac added $1.09, or 7.12 per cent, to $16.40, after being the first to follow the RBA's cut, and the only before the close of trade.
National Australia Bank rose 84 cents, or 4.49 per cent, to $19.55, and ANZ lifted 44 cents, or 3.32 per cent, to $13.70.
The major miners were mixed, with Rio Tinto up $1.08 to $45.53, and BHP Billiton down 22 cents to $29.78.
Oil and gas producer Woodside Petroleum lost 41 cents to $34.94, and Santos added 33 cents to $14.52.
Among gold stocks, Newcrest dropped $1.00, or 3.23 per cent, after raising more than expected from its $750 million share placement following strong demand from domestic and international investors.
Lihir slipped seven cents lower to $3.08 and Newmont fell 14 cents to $6.25.
The price of gold in Sydney at 1627 AEDT was US$900.65 per fine ounce, down US$13.25 on Monday's close of US$913.90.
Shares in fertiliser and explosives maker Incitec Pivot plunged when it said the global economic downturn may cut earnings in fiscal 2009 by about one third.
Incitec lost 78 cents, or 30.47 per cent, to $1.78.
"The market is still holding its breath before the reporting season, and today is the classic example ... with CBA and Incitec," Ms Spencer said.
"It is going to be a market that is polarised significantly by those that disappoint and those that may not be as bad as the market's priced in."
Shares in the world's biggest listed shopping centre owner, Westfield Group, were placed in a trading halt after it announced it would raise $2.9 billion through a securities placement after announcing asset value writedowns amid falling sales figures.
Qantas Airways shares were placed in a halt also, amid speculation the national carrier would announce an equity raising of about $500 million - its first in more than six years.
West Australian Newspapers Holdings Ltd (WAN) added 10 cents to $4.05 as it reported a jump in interim net profit and forecast full year earnings of between $100 million and $108 million.
Consolidated Media dipped one cent to $1.79, Fairfax Media lost 14 cents to $1.18, while News Corporation lifted 13 cents to $11.28 and its non-voting scrip ascended 30 cents higher to $10.20.
In the retail sector, Woolworths rose 46 cents to $27.61, David Jones dropped five cents to $2.24 and Harvey Norman fell three cents to $2.10.
The top-traded stock by volume was Incitec Pivot, with 99.4 million shares worth $175.4 million changing hands.
Preliminary national turnover was 1.33 billion shares worth $4.09 billion, with 353 stocks up, 490 down and 323 unchanged.
- AAP
