KEY POINTS:
Australian stocks staged a brave rebound to end the day slightly higher, after lower trading throughout the day.
At the close the benchmark S&P/ASX200 index was 7.7 points higher at 5436.7, while the all ordinaries climbed 10.6 points to 5409.2.
At 1617 AEDT on the Sydney Futures Exchange the December share price index contract was 12 points up at 5438, on a volume of 11,561 contracts.
"The market was knocked down early, but was up off the canvas as only an Australian market can do," Bell Potter analyst Stuart Smith said.
Smith said good performances were put in by takeover prospects Coles Myer and CSR.
Retailer Coles Myer ended three cents higher at A$13.82, while building products company CSR jumped 10 cents to A$3.34.
"Interesting to note that six of the 20 leaders index are perceived to be shortlisted for takeover," he explained.
"This move today on what is big volume, I would say ... augurs well for next week."
He also noted that Downer EDI, whose shares ended 46 cents higher at A$6.96, had scored a milestone with its rail consortium winning New South Wales' largest ever passenger train order in a private public partnership deal worth A$3.6 billion.
The early slump on the local market followed a downwards move on Wall St overnight, led by big drug makers and health-care companies as worries surfaced over the legislative agenda of a Democrat-controlled Congress.
A jump of more than two per cent in crude oil prices and a weaker-than-expected reading in a gauge of consumer sentiment added to the weaker tone.
The Dow Jones industrial average fell 73.24 points to 12,103.30, while the Standard & Poor's 500 Index was down 7.39 points to 1378.33 and the Nasdaq Composite Index sank 8.93 points to 2376.01.
Resources were mixed, with BHP Billiton improving 20 cents to A$27.93 but rival Rio Tinto shedding 92 cents to A$80.46.
At 1625 AEDT the price of gold in Sydney was up US$15 at US$632.80 per fine ounce.
Gold miners also showed a positive performance, Lihir Gold up 16 cents at A$2.98 and Newcrest Mining up 62 cents at A$24.
Most of the banks ended the day lower, pressured by NAB and this week's interest rate hike.
"The financial sector was pressured by both the National Australia Bank going ex-dividend and the increasing fear that rising interest rates are going to impact on the housing market which is going to have a flow on effect to the banks mortgage revenue," CMC Markets senior dealer James Foulsham said.
NAB ended A$1.18 lower at A$38.61, ANZ shed 38 cents at A$28.53 and Commonwealth surrendered 17 cents at A$47.56, but Westpac managed a gain of 22 cents to A$24.68.
Telecommunications giant Telstra was the most traded stock of the day with 79.14 million shares worth A$309 million changing hands, but ended up only one cent at A$3.92.
Yesterday was the deadline for retail investors to take up shares in its third stock offering and the government now says it may increase the size of the stake on offer.
Media interests showed no clear direction, with PBL closing down seven cents at A$19.20, but News Corp advancing 91 cents to A$28.90 and its non-voting stock edging up 88 cents to A$27.77.
Fairfax dropped three cents at A$4.79, despite telling its annual general meeting in Melbourne today that it expects earnings to pick up the second half of this year on the back of momentum in its online business.
Preliminary market turnover was 1.45 billion shares worth a combined A$5.45 billion, with 686 companies higher, 468 lower and 342 unchanged.
- AAP