Banks lead market higher after CBA raises rates

NEWS of more job losses in the banking industry here and another round of austerity measures in Greece did little to unsettle investors yesterday. The market rose 1 per cent after the Commonwealth Bank increased its variable mortgage interest rate independently of the Reserve Bank.

NEWS of more job losses in the banking industry here and another round of austerity measures in Greece did little to unsettle investors yesterday. The market rose 1 per cent after the Commonwealth Bank increased its variable mortgage interest rate independently of the Reserve Bank.

All the main sectors finished higher except for property trusts, which were just in the red. The strongest performers were goldminers and banks, with the latter benefiting from the effects of the Greek vote for more spending cuts.

The S&P/ASX200 index gained 39.8 points, or 0.9 per cent, to 4285.1. The broader All Ordinaries rose by 36.8 points, or 0.8 per cent, to 4359.4.

ANZ confirmed it would slash 1000 jobs this year in response to a changing environment for banks worldwide. The Finance Sector Union said it feared 10,000 banking positions could be lost in the next 18 months.

Despite the bad news, financial stocks rallied after Commonwealth Bank followed Westpac, ANZ, and Bendigo Bank in raising its variable mortgage rate. Its 10 basis points increase, the equivalent of 0.1 percentage points, increased its variable rate to 7.41 per cent. CBA shares gained 0.8 per cent, or 41?, to close at $50.29 ANZ was up 1.6 per cent to $21.77, and Westpac and NAB each rose 1.4 per cent.

Meanwhile, the Greek parliament voted for another round of austerity measures to secure more emergency funding from European governments.

"There is no way to cloud the issue," IG Markets strategist Stan Shamu said. "The belt-tightening measures imposed on Greece are brutal and come at time when the Greek economy needs to grow, so cutting 7 per cent gross domestic product over the next three years is tough."

The deal, which will cut debt by ?100 billion ($132 billion), clears the way for a second ?130 billion bailout package that might help it avoid a sovereign default next month.

The big resources stocks finished strongly, with BHP Billiton gaining 36? to $36.66 Rio Tinto up 45? to $70.43, and Woodside Petroleum gaining 18? to $35.58.

Australia's biggest gold producer Newcrest finished $1.09 higher, or up 3.2 per cent, at $35.10.

Construction firm Leighton's improved profit result was overshadowed by an alleged case of improper payments being made by one of the company's subsidiaries in Iraq. Its shares lost 47? to $23.38. JB Hi-Fi surrendered early gains to finish 4? higher at $12.03 after its net profit fell by 9.4 per cent in the first half.

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