Chinese growth figures add to positive tone
THE sharemarket closed at its highest level in five weeks after better than expected Chinese economic growth buoyed investor sentiment.
THE sharemarket closed at its highest level in five weeks after better than expected Chinese economic growth buoyed investor sentiment.The world's second-largest economy grew by 8.9 per cent in the three months to December. Although that was the slowest rate of expansion for 30 months, it exceeded expectations of about 8.5 per cent growth.The market extended early gains driven by a strong sale of French treasury bills overnight, despite news that the European Union's second-largest economy was stripped of its AAA credit rating by Standard and Poor's on Friday.News that Fortescue Metals, Australia's third largest iron ore producer, and Rio Tinto exceeded their production targets also helped resources stocks to post gains of more than 2 per cent.At the close yesterday, the benchmark S&P/ASX200 index was up 68.4 points, or 1.7 per cent, at 4,215.6, while the All Ordinaries rose 68.8 points, or 1.6 per cent, to 4,277.7.Energy stocks led the pack, adding 2.7 per cent to claw back Monday's losses.Fortescue added 3.9 per cent to $4.80 as the company announced it shipped a record 14.77 million tonnes of iron ore in the December quarter while also reducing production costs.Rio gained 1.25 per cent to $65.70 after the mining giant's global iron ore operations produced a record 65 million tonnes in the December quarter, beating analysts' forecasts.The results added to hopes that BHP Billiton would top its own expectations when it reports its production results today.BHP shares rose 2 per cent to $36.70, the highest since December 8."The latest announcement from Fortescue is helping confidence in the mining sector," CommSec chief economist Craig James said. "We're at the point where China is looking to invigorate their economy and this is going to help our mining sector."Wesfarmers climbed 1.8 per cent to $30.55 after it announced that its coal production for the December quarter at its Curragh mine was 2.2 million tonnes, 1.7 per cent down on the previous quarter.Uranium miner Paladin Energy surged 11.8 per cent to $1.72 after it reported record production in the December quarter and re-affirmed full-year production targets.Shares in Arafura Resources rose 25 per cent to 47.5? after it reported it had produced rare earths oxide samples for potential customers.Gold closed in Sydney at $US1658.76 per ounce, up $US20.11.Volumes were light, with 1.59 billion shares traded for $3.68 billion as US markets were closed overnight on Monday for Martin Luther King day.