Reuters: Hot Stocks: Australian shares hit 17-month high on iron ore, rate hopes

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Australian shares hit 17-month high on iron ore, rate hopes Dec 18th 2012, 05:40 Tue Dec 18, 2012 12:40am EST (Updates with comments, details) By Victoria Thieberger MELBOURNE, Dec 18 (Reuters) - Australian shares rallied 0.5 percent on Tuesday to a 17-month high, boosted by a rise in iron ore prices, hopes for further rate cuts in 2013, and investor optimism of a resolution to the U.S. "fiscal cliff" budget talks. Top miners led the gains, with Rio Tinto up 1.9 percent, third-ranked iron ore miner Fortescue Metals Group up 2.9 percent, while mid-tier miners also benefited. The benchmark S&P/ASX 200 index advanced 21.8 points to 4,595.2, the highest close since July 22, 2011. New Zealand's benchmark NZX 50 index closed 0.3 percent higher at 3,979.3. "The market is showing early signs of a 'fear of missing out', as more cash is pushed into equities from the sidelines," said Ben Taylor, sales trader at CMC Markets. Taylor said the minutes of the Reserve Bank's Dec. 4 meeting has also given investors reason to believe that further cuts in interest rates will be seen next year to support the underperforming sectors of the economy. Investors are factoring in a 60 percent chance of a quarter point easing to 2.75 percent in February, when the central bank next meets. Still, the Australian market is languishing 33 percent below its all-time high, underperforming many regional peers as investors have been fixated on European fiscal worries and the slowdown in the U.S. economy. Among the mid-tier miners, Atlas Iron ended up 5.2 percent and Northern Iron up 7.6 percent after iron ore prices hit the five-month high. Uranium miners rallied for a second session, boosted by the pro-nuclear Liberal Democratic Party Japan's election landslide. Paladin Energy jumped 12.4 percent to A$1.08, helped by an upgrade from UBS analysts to buy, while ERA Resources rose 7.3 percent to A$1.33. Toro Energy shares fell 4.4 percent when the Western Australian state government delayed a decision on the Wiluna uranium project until March. Top mortgage lender Commonwealth Bank of Australia moved to expatend its hold on the mortgage market, taking majority control of former independent lender Aussie Home Loans, for an undisclosed sum. Its shares rose 0.3 percent to A$61.45. Qantas Airways gained 2.9 percent to A$1.435 on an unsourced report in the Australian Financial Review that Australia's competition regulator was looking favourably on Qantas's planned alliance with Emirates. (Editing by Eric Meijer) Link this Share this Digg this Email Reprints

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