THE local market closed at a six-week high after data showing an easing of inflation boosted hopes for further interest rate cuts.
Financial stocks surged 2 per cent on hopes that a rate cut by the Reserve Bank could help boost profits. At the close yesterday, the benchmark S&P/ASX200 index was up 47.1 points, or 1.1 per cent, at 4271.3, its highest since December 8. The broader All Ordinaries index was up 42.7 points, or 1 per cent, at 4329.1. The March share price index futures contract was up 46 points at 4238.
"There are a lot of people looking for yield right now as the [debt crisis] overseas is lingering on," Cameron Securities client adviser Adrian Leppinus said. "And if we do get another rate cut, people are expecting [the banks] might not pass on the full amount and that will ease off on their margins."
Market heavyweight BHP Billiton was up 34?, or 0.92 per cent, at $37.42 while rival Rio Tinto was steady at $68.35. Rio says it now holds a majority stake in Ivanhoe Mines, further extending its control over huge Mongolian gold and copper deposits.
Among the banks, Westpac surged 3.5 per cent, or 72?, to $21.30 - its highest since December 8.
Commonwealth Bank closed up 2.4 per cent, or $1.20, at $51, ANZ gained 2.2 per cent, or 47?, to $21.42 and National Australia Bank rose 2 per cent, or 48?, to $24.20.
The industrials sector added 1.1 per cent after strong results from Monadelphous spurred hopes for good earnings from the sector next month. The engineering firm ended the day up 30? at $21.82 after it said its first half earnings were set to grow up to 27 per cent.
"Results like this will help other mining services stocks, which have recently been beaten down," City Index analyst Peter Esho said.
Lynas Corp was among the top performers, adding 5.1 per cent, or 6.5? to $1.345 after the company said it had secured enough funds to complete the construction and start of its delayed rare earths processing plant in Malaysia.
Whitehaven Coal was up 10? at $5.53 after it reported increased production by 2 per cent in the December quarter although sales fell.
Atlas Iron was one of the day's losers, shedding losing 4.3 per cent or 14? to $3.12.