BHP leads field to 20-month high

THE sharemarket has finished at a new 20-month high, with investors reacting positively to BHP Billiton's quarterly production results.

The benchmark S&P/ASX 200 Index added 8.7 points, or 0.2 per cent, to 4787.8, its highest close since May 2, 2011, while the broader All Ordinaries rose 9.2 points, or 0.2 per cent, to 4812.2.

Among the sectors, energy rose 0.4 per cent, materials 0.6 per cent, financials 0.3 per cent and gold miners 1.8 per cent. Health and consumer discretionary bucked the trend, down 1.3 per cent and 0.2 per cent respectively.

BHP shares rose 1.3 per cent to $37.06, after the miner reported its Pilbara operations had produced an extra 3 million tonnes of iron ore in the December quarter compared to the September quarter. BHP also said it expected to meet its guidance of 183 million tonnes by the end of this financial year.

Rival Rio Tinto slipped 0.7 per cent to $66.45.

RBS Morgans senior trader Luke McElwaine said this was likely due to investors taking profits after its recent good run since the removal of Tom Albanese as chief executive.

"The market had another nice move today, now sitting just under 4800," Mr McElwaine said. "[As well as BHP] all of the banks, with the standouts being ANZ, Westpac and NAB, are the ones driving the index up."

ANZ jumped 1.1 per cent to $25.94, Westpac rose 1 per cent to $26.75, NAB gained 0.6 per cent to $26.75 and CBA inched up 0.2 per cent to $62.67.

Shares in pesticide maker Nufarm slumped 9.2 per cent to $5.75 after the agribusiness said hot and dry weather conditions in eastern Australia would likely hurt its earnings.

Linc Energy shares surged 9.6 per cent to $2.16 after it released estimates for its South Australian shale operations, jumping to 223 billion barrels of oil equivalent.

Media stocks had a slow day, Fairfax media lost 1.9 per cent to 52.5¢, APN dropped 4.8 per cent to 30¢, Seven West Media slipped 0.5 per cent to $2, News Corp fell 0.4 per cent to $26.25 and Ten was flat at 34.5¢.

The market barely reacted to consumer price index figures released by the Australian Bureau of Statistics, which came below expectations, showing the nation's inflation levels remain subdued.

The dollar slipped slightly on the news, falling from $US1.0558 before the release to $US1.0538 in late trading.

"The dollar is still over $US1.05, if there was thought of an imminent interest rate cut, you might see a bit of weakness in that, but it's just not moving," Mr McElwaine said.

"There is a big differential between interest rates here and around the world, so maybe a $US1.05 is justified."