Good day for mining, dollar and gold

The dollar also soared more than half a cent after the release of monthly unemployment figures, which looked good on the face of it.

Every industry sector gained ground, except health stocks.

Overall, the benchmark S&P/ASX 200 index rose 34.1 points, or 0.8 per cent, to 4312.9.

After being beaten down for the past few days, mining stocks rebounded yesterday, with global miner BHP Billiton rising 29? to $31.34, and Rio Tinto climbing 82? to $50.16. Mid-tier iron ore miners also did well, with Atlas Iron jumping 4.2 per cent and Gindalbie surging 5.5 per cent.

Lynas Corporation skyrocketed 24.5?, or 41.2 per cent, to 84? after the rare-earths miner was granted a temporary licence for its controversial $US800 million rare-earths refinery in Malaysia.

But Fortescue Metals continued to lose value, dropping 15? to $2.97 on concerns over its about-face on expansion plans and the falling iron ore price.

New figures showed the unemployment rate fell unexpectedly to 5.1 per cent last month, from 5.2 per cent in July.

The number looked good initially, helping the dollar rise to US102.28 by the close of trade, up from US101.88.

But economists pointed out that the decline in unemployment was due to a falling participation rate a measure of the number of people who are either employed or actively looking for work which last month deteriorated to its lowest since November 2006.

"Were it not for the decline in participation in August, the unemployment rate would be standing at 5.4 per cent this month," Commonwealth Bank's James McIntyre wrote in a note to clients.

"Worse still, had the slump in participation over the past year not occurred, the unemployment rate would be clocking in at 6 per cent in August, instead of the spuriously comforting 5.1 per cent outcome."

For the day, Qantas shares were up 7.5?, or 6.7 per cent, at $1.20, after an agreement with Dubai-based Emirates that could help save its struggling international operations. The deal will leave London as Qantas' sole European destination.

Billabong rose 9.5? to $1.365 after the clothing retailer said it would formally consider a takeover after receiving its second offer in the space of six weeks.

Among other stocks, Australian-listed automatic teller machine supplier GRG International surged 2?, or 36.4 per cent, to 7.5? after it said it would acquire US-based ATM maker Triton for about $US25 million.

Gold closed in Sydney at $US1703.55 an ounce, up $US11.29 on Wednesday's closing price of $US1692.26.

National turnover was 1.98 billion securities worth $5.28 billion, with 519 stocks up, 403 down and 343 unchanged.