Reuters: Hot Stocks: Australian shares buoyed by defensives, reach fresh 17-month high

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Australian shares buoyed by defensives, reach fresh 17-month high Dec 20th 2012, 06:00 Tweet Share this Email Print Thu Dec 20, 2012 1:00am EST (Updates with comments, details) SYDNEY, Dec 20 (Reuters) - Australian shares rose 0.4 percent on Thursday, buoyed by defensive stocks while investor sentiment remained averse to risk over fears U.S. lawmakers might not reach a deal in time to avoid tax hikes and spending cuts in the new year. Wall St. fell on Wednesday as confidence waned that a deal could be struck soon to avoid the "fiscal cliff". The Australian market also pared gains after the centre-left Labor government abandoned a long-held pledge to return its budget to surplus in the current financial year, which ends in June 2013. The government blamed a very strong Australian dollar and lower export earnings for blowing a large hole in tax takings. "The market didn't receive (Treasurer) Wayne Swan's comments about the end of the budget surplus too well, so our index has come down after the announcement," said Miguel Audencial, a sales trader at CMC Markets. The benchmark S&P/ASX 200 index was up 16.3 points at 4,634.1 to reach a fresh 17-month high. It climbed 0.5 percent on Wednesday to hit its highest closing level since July 8, 2011. Defensive stocks were strong, with telecommunications giant Telstra rising 0.2 percent, blood products maker CSL Ltd up 1 percent and supermarket giant Wesfarmer jumping 1.3 percent. "We've got a good defensive sector that has performed well today, that's carried our market and played off the energy sector," said Audencial. "We are looking at a risk-off mentality for some investors right now." "So overnight, there were some concerns that the fiscal cliff negotiations would not push through as they intended originally," he said. Banking stocks were also strong, with Westpac Banking Corp leading gains, up 0.7 percent. Miners were weak. BHP Billiton Ltd traded flat, while rival Rio Tinto dropped 0.6 percent. Energy stocks were also down, with Woodside Petroleum losing 1.2 percent and Santos dropping 1.5 percent. Flagship carrier Qantas gained 0.7 percent after Australia's competition watchdog gave conditional approval to an alliance between the struggling airline and Dubai's Emirates . The deal was approved for only five years, not 10 as had been sought. The expiry of the December quarter SPI 200 futures and options and December equity options and index options on Friday boosted volumes as investors traded off before the options became worthless. New Zealand's benchmark NZX 50 index jumped 1.3 percent to 4,075.5 points. (Reporting by Thuy Ong; Editing by Paul Tait) Tweet this Link this Share this Digg this Email Reprints Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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