Reuters: Hot Stocks: Australia shares edge higher as RBA holds rates but leaves room to cut

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Australia shares edge higher as RBA holds rates but leaves room to cut Jun 4th 2013, 06:37 Tue Jun 4, 2013 2:37am EDT (Adds details, comments) SYDNEY, June 4 (Reuters) - Australian shares finished 0.3 percent higher on Tuesday, ending a three-session run of losses as Wall Street gains overnight bolstered sentiment and firmer metals prices underpinned miners. The market lifted after Australia's central bank kept its cash rate at a record low of 2.75 percent on Tuesday, but kept the door wide open to further easing in part due to the still lofty level of the local currency. "The decision to keep rates at 2.75 percent came as no surprise to investors as the market had already factored this into their trading," said Betty Lam, Sales Trader at CMC Markets. "The ASX200 gained a slight 10 points following the announcement." The S&P/ASX 200 index tacked on 12.5 points, after a volatile morning session, to finish at 4,900.8. The benchmark fell 0.8 percent to its lowest close in four months on Monday. The index has recently been hit by concerns over slowing growth in China, jitters the Federal Reserve will wind back its stimulus this year, and volatility in Japanese equities. "The ASX 200 was in a bit of a holding pattern going into the RBA announcement, and that was always going to be the way given the possibility of an out-of-consensus cut," said Chris Weston, chief market strategist at IG. Blue chip miners edged higher after London copper climbed for a second session on Tuesday. BHP Billiton Ltd rose 0.5 percent while Rio Tinto Ltd and Iluka Resources Ltd both soared 2.5 percent. High-yielding banks reversed early losses to finish stronger. National Australia Bank jumped 1.1 percent while top lender Commonwealth Bank of Australia edged 0.3 percent higher. The big four banks average some 5.7 percent for dividend yields, compared to between 3 percent and 4 percent for 12-month term deposits, making them attractive to investors. While the Fed stimulus jitters have eased somewhat, uncertainty over when the central bank may roll back the bond-buying scheme continues to buffet markets. Australian company Billabong International Ltd dived 49.5 percent to an all-time closing low of A$0.23. The surfwear company issued its third profit warning in six months as it revealed on Tuesday that potential takeover suitors had walked away from a deal. Elsewhere, defensives finished moderately weaker. Flagship telecommunications provider Telstra Ltd inched 0.2 percent higher, but consumer retailer Woolworths Ltd was down 0.5 percent. Biotechnology firm CSL Ltd fell 0.4 percent. Miner Rexmin rocketed 54 percent to A$0.385, its highest point since April 12, after saying it had signed an agreement for the financing, construction and development of Hillside Project in South Australia. U.S. stocks rose on Monday as weaker-than-expected factory activity supported views the Federal Reserve will keep economic stimulus in place. New Zealand's benchmark NZX 50 index lost 0.8 percent or 37.6 points to finish at 4,473.8. (Reporting by Thuy Ong; Editing by Eric Meijer) Link this Share this Digg this Email Reprints

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