Aust stocks close higher

The Australian stock market further pared its early gains at the close after reaching a fresh, five-year intra-day high on the back of Larry Summers' decision to withdraw from the race for the US Federal Reserve chairman seat, meaning the body is now less likely to wind back economic stimulus quickly.

At the official market close of 1615 AEST, the benchmark S&P/ASX200 index rose 0.54% to 5248 points, while the broader All Ordinaries index added 0.52% to 5,241.7 points.

Soon after the open, the benchmark rose to 5,266 points, a level not seen since before the collapse of Lehman Brothers in 2008, while the All Ordinaries index hit 5,259 points, also a five-year high.

IG analyst Chris Weston said with Mr Summers out of the race for the helm of the US Fed, markets were rallying on expectations Janet Yellen was now in the box seat.

Some observers had expected Mr Summers to remove stimulus quickly, in contrast to Ms Yellen's stance, which is considered even more dovish than present chairman Ben Bernanke.

"You have to think Janet Yellen will get the job and thus the prospect of easily the most market-friendly outcome for the Fed chairman’s role is being celebrated in the markets today," Mr Weston said.

"Emerging markets are seeing positive flows, which again is testament to the belief that the Fed will be more inclined to keep the reflation trade alive," he said.