KEY POINTS:
MELBOURNE - The Australian share market surged more than four per cent today following the US$700 billion Wall Street bailout by the US government over the weekend, and the ban on short selling locally.
At 1415 AEST, the benchmark S&P/ASX200 was 216.4 points, or 4.5 per cent, higher at 5020.5 points, while the broader All Ordinaries gained 209.4 points, or 4.33 per cent to 5050.1.
On the Sydney Futures Exchange, the December share price index contract was 259 points higher at 5054, on a volume of 56,009 contracts.
Investors rushed into the market after the US government announced it would put up a US$700 billion (A$840 billion) rescue package to buy mortgage debt from troubled US banks in a bid to avert a worsening of the worst financial crisis on Wall Street since the Great Depression.
"What (Henry) Paulson (the US Treasury Secretary) has done has created a very positive market sentiment, and that's the key," said Macquarie Equities associate director Lucinda Chan.
"The market sentiment has changed in the market, so people are feeling a little bit more confident but they're not totally overconfident in the sense we've still got to wait and see how this thing pans out.
"The sentiment has changed, and that's very important for moving forward."
An Australian Securities and Investments Commission ban on short selling, designed to reduce volatility and improve liquidity in the local equity market, also buoyed the share market today and lifted shares in companies that had recently been targeted by hedge funds.
Short-selling targets Macquarie Group Ltd and Babcock and Brown Ltd bounced strongly as market participants sought to unwind short positions and bought up stock.
Babcock and Brown leapt 54 per cent, or 43.5 cents, to $1.23 after over 14.7 million shares changed hands.
Australia's largest investment bank Macquarie rallied 5.2 per cent rally, or $1.90, to $37.80.
Australia's major trading banks also benefitted from a strong rebound in investor sentiment on a day when around $51.5 billion was added to the value of the All Ordinaries.
At 1615 AEST ANZ Banking Group jumped $1.44 or 8.13 per cent to $19.15, while National Australia Bank climbed $1.30, or 5.65 per cent, to $24.30.
Commonwealth Bank dded $1.90, or 4.45 per cent, to $44.60, Westpac put on $1.16, or 4.93 per cent, to $24.70 and takeover target St George Bank edged 94 cents, or 3.08 per cent, higher to $31.49.
"I think (the US authorities) would like to see these markets lifted and the share prices find a floor somewhere," Ms Chan said.
Liquidity may take some time to return to the market, she said.
"It may take a little while as it all depends on how quickly the Paulson plan is approved by Congress."
Insurance stocks were also buoyed, with QBE leaping seven per cent, or $1.80, to $27.50 and Insurance Australia Group adding 5.12 per cent, or 21 cents, to $4.31.
Resources stocks held on, with BHP Billiton recording a "very solid" rise, Ms Chan said.
BHP Billiton surged 12.1 per cent, or $4.30, to $39.70, and Rio Tinto jumped 9.3 per cent, or $9.50, to $111.00.
Oil stocks were mixed, with Oil Search losing nine cents to $5.62 by 1615 AEST, while Santos gained 25 cents to $18.53 and Woodside Petroleum added 5.4 per cent, or $2.94, to $57.00.
Gold stocks posted healthy gains. Lihir Gold added 20 cents to $2.65, while Newcrest Mining added 6.9 per cent, or $1.65, to $25.50.
The spot price of gold was at US$869.15 an ounce by 1647 AEST, up US$22.55 on Friday's local close of US$846.60 an ounce.
Making news today, Sigma Pharmaceuticals rose four cents to $1.39 after the company reconfirmed its full year guidance for 2008/09 and booked a one per cent rise in its first half net profit to $30.7 million.
Retailers were mixed, with Woolworths steady at $27.53 and Wesfarmers gaining 95 cents to $31.75.
The media sector was mixed, with Fairfax gaining 10 cents to $2.98, Consolidated Media Holdings losing 10 cents to $2.72, News Corp falling 41 cents to $16.49 and its non-voting shares dropping 27 cents to $16.21.
Telstra was the most traded stock, with 75.9 million shares changing hands, worth $307.7 million.
The telco dropped 11 cents to $4.02.
Preliminary national turnover reached 1.6 billion, worth a total of $7.28 billion, with 704 stocks up, 382 stocks down and 308 unchanged.
- AAP
