China data drives market to five-year high

The Australian sharemarket surged to a five-year high on Wednesday, with investors inspired by China's economic growth.

At the close, the benchmark S&P/ASX 200 Index was up 33.2 points, or 0.64 per cent, at 5234.4. The broader All Ordinaries rose 31.7 points, or 0.61 per cent, at 5230.6.

Positive economic data out of China, strong Australian consumer sentiment and the likelihood of a non-violent outcome in Syria all contributed to a rally on the local market, lifting the All Ords and ASX 200 indices to their highest closing levels since June 2008.

IG Markets analyst Chris Weston said investors were prepared to overlook global economic concerns to focus on growth prospects.

"The Chinese market is the inspiration behind our market's gains," Mr Weston said. "Global equities are in a bit of a sweet spot at the moment."

Mr Weston said Chinese growth was pushing higher than many people had anticipated. That trend looks set to continue as policymakers seek to attract foreign capital, and stem flows out of China.

The local market came out of the blocks early after an overnight rally on international markets as the Obama administration appeared to pursue a diplomatic solution to the Syrian conflict.

Local gains were led by the materials sector, with particular strength in iron ore stocks thanks to a renewed interest in China.

BHP Billiton added 43¢ to $36.33, Rio Tinto gained $1.27 to $64.15 and Fortescue Metals was 29¢ higher at $4.80.

Among the major banks, National Australia Bank added 41¢ to $33.85, ANZ gained 23¢ to $30.40, Commonwealth Bank was 24¢ higher at $74.14 and Westpac rose 7¢ to $32.48. Investment bank Macquarie Group gained $1.59 to $48.55.

The Australian dollar also gained ground and closed the local session at US92.90¢, up from US92.50¢ on Tuesday.

Three-year bond futures prices hit their lowest level in three months as it looks likely the Reserve Bank is getting to the end of its cash rate cutting cycle.

A possible end of the US Federal Reserve's $US85 billion a month bond purchase program, designed to stimulate the American economy, is also a factor.

The key local event for markets on Thursday will be the release of official employment figures for August. The unemployment rate is expected to rise to a four-year high of 5.8 per cent, from 5.7 per cent in July. AAP