Aussie market soars on Italy news

Australian shares gained more than one per cent as markets focused on Italy and stronger commodity prices prompted local investors to buy mining stocks.

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At 1615 AEDT, the benchmark S&P/ASX200 index was up 52.3 points, or 1.22 per cent, at 4,346.1, while the broader All Ordinaries index was up 49.4 points, or 1.14 per cent, at 4,406.2.

The December share price index futures contract was 60 points higher at 4,340, with 30,477 contracts traded.

The materials sector led local gains after Wall Street and stronger metals prices provided a boost to the market. Wall Street rose after Italian Prime Minister Silvio Berlusconi said he would resign once a new budget was passed. Italy has become a key focus for investors this week, with Berlusconi seen as an obstacle to sweeping economic reforms needed to help Italy cut its debt load and avoid sinking into a debt crisis.

IG Markets analyst Stan Shamu said the Australian market had opened strongly, due to the positive lead from Wall Street overnight.

“Reports suggest Silvio Berlusconi is on his way out and markets seem to have taken kindly to that news,” Mr Shamu said.

The general theme of risk taking had continued, with the materials sector rising 1.7 per cent.

BHP Billiton shares were up up 58 cents, or 1.5 per cent, at $38.33, Rio Tinto had added 98 cents to $70.75. Fortescue Metals was eight cents higher, or 1.6 per cent, at $5.10. An Aboriginal corporation has been denied the opportunity to speak at Fortescue Metals Group’s annual general meeting.

Myer shares were among the best performers as the consumer discretionary sector posted solid gains.

Myer shares were up 15 cents, or 6.4 per cent, at $2.48 after it reiterated its guidance for flat sales for the full financial year.

Other retailers were also higher, with David Jones up 15 cents at $3.29 and Harvey Norman was seven cents higher at $2.19. In other news, resources and media company Seven Group Holdings expects its first half profit to be higher than for the same period last year.

Its shares were up 20 cents, or 2.64 per cent, at $7.78.

National turnover at 1650 AEDT was 1.84 billion securities worth $4.62 billion, with 657 stocks up, 397 down and 359 steady. AAP krc/shd 09-11-11 1651