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Domestic strength encourages buyers

THE sharemarket closed higher yesterday but earlier, strong gains were whittled back on profit-taking as investors took advantage of better performers after a week of extreme volatility on global markets amid European bank worries.

THE sharemarket closed higher yesterday but earlier, strong gains were whittled back on profit-taking as investors took advantage of better performers after a week of extreme volatility on global markets amid European bank worries.

The benchmark S&P/ASX 200 index closed up 31.8 points, or 0.77 per cent, at 4172.6, while the broader All Ordinaries index rose 34.4 points, or 0.82 per cent, to 4237.9.

UBS Warburg Australia Equities' executive director, Rob Taubman, said the market reflected investors' confidence in the strength of the local economy. "It's feeling much more stable," he said.

"I think there's been a realisation by funds that the yield and valuations are in pretty attractive territory now," he said.

Mr Taubman said the gains were not expected to last because investors continued a close watch on the direction of offshore markets.

Bell Potter senior adviser Stuart Smith said the market had followed a firm lead from Wall Street. US stocks made another dramatic comeback overnight as markets around the world strengthened against a background of continuing volatility. Local banks were mixed yesterday. National Australia Bank was up 6? at $22.96, Westpac 2? higher at $20.47, Commonwealth Bank 2? lower at $48.56 and ANZ lost 17? to $19.92.

Miners ended the day stronger. BHP Billiton rose 28? to $38.21 while Rio Tinto was up $1.11 at $71.52. Fortescue Metals rose 15? to $5.94 after an appeal by a native-title claimant group against the West Australian government's decision to grant three mining leases to Fortescue Metals was dismissed yesterday.

Shopping-centre owner Westfield was down 1? at $7.55. The company said it was spending $160 million to buy into a retail-development in Milan.


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