Aust stocks close stronger

Local market extends gains after RBA hints interest rates could fall if needed.

The Australian sharemarket closed stronger today after Reserve Bank governor Glenn Stevens jawboned the Australian dollar and hinted that interest rates could fall further if necessary.

At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index added 35.8 points, or 0.66%, to 5,491.2 points, while the broader All Ordinaries index gained 37.8 points, or 0.69%, to 5,479.5 points.

Giving a speech in Hobart today, Mr Stevens repeated the central bank's view that the Australian dollar's historically high level is "quite uncomfortable" for some trade-exposed sectors.

The central bank also still has "ammunition" on interest rates", Mr Stevens said.

Lonsec senior client adviser and economist Michael Heffernan said any cut in interest rates would be a surprise, but the governor's comments meant further easing was a possibility.

"It would be very good for dividend yield stocks," Mr Heffernan said.

"It would be greeted quite favourably, given the Australian dollar has gone up strongly, impacting manufacturing."