Australia shares rally on brightening outlook on China, U.S.

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Published: July 29, 2015 8:45:25 AM

Australian shares rose the most in two weeks on Wednesday as a reprieve from the Chinese equities correction and an upbeat U.S. economic outlook gave investors inspiration to seek bargains.

Australian shares rose the most in two weeks on Wednesday as a reprieve from the Chinese equities correction and an upbeat U.S. economic outlook gave investors inspiration to seek bargains.

After Beijing promised to prop up the two mainland exchanges by buying stocks, the benchmark Chinese index  rebounded slightly after diving 8.5 percent in a single day earlier in the week.

Wall Street rose overnight amid hopes that the Federal Reserve is both upbeat about U.S. economy and considering raising rates later than September, as has been expected.

The S&P/ASX 200 index rose 1 percent or 56.1 points to 5640.8 by 0225 GMT, its biggest rise since July 14.

“Overnight we saw some of the macro concerns in the market being allayed or removed temporarily,” said CMC Markets strategist Ric Spooner.

“The Chinese stock market has stopped falling and we saw some of the commodity prices like oil rallying a little bit, and that has given freer rein to the bargain hunting that we’ve seen over the past couple of days.”

Banks led gains, with National Australia Bank up 1.4 percent after saying it finished selling its U.S. unit. Commonwealth Bank of Australia and Westpac Banking Corp  were up 0.8 percent and Australia and New Zealand Banking Group added 0.7 percent.

Of the large miners BHP Billiton rose 2.3 percent and Rio Tinto added 1.3 percent on higher commodity prices. Iron ore rival Fortescue Metals Group jumped 6.7 percent, the biggest gainer on the market.

Bluescope Steel rose 5 percent, the second biggest gainer.

Energy stocks also rose following a gain in the oil price. Woodside Petroleum was up 1.1 percent while Oil Search  and Santos were up about 1 percent.

The large retailers also firmed, with Wesfarmers, owner of Coles supermarkets, up 1.2 percent and rival Woolworths  up 0.1 percent.

New Zealand’s benchmark NZX50 share index was up 0.2 percent at 5,857.40 as investors worried less about China’s stock market.

Casino company Sky City surged 2.4 percent as it said new gaming tax rules in Australia’s Northern Territory would cost its Darwin establishment less than originally expected.

Spark, Contact Energy and Meridian Energy  were all up about 0.9 percent, offsetting similar sized dips for Fletcher Building and Sky TV.

Among smaller stocks, Green Cross Health, which owns pharmacy chains, rose 6.3 percent to a six-week high, after it declared a special dividend the previous day.

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