Index holds on to sliver of early surge

Trading started strongly after better than expected US housing data helped lift Wall Street and European markets overnight.

The market jumped 30 points in the first 90 minutes after figures showed pending US home sales had climbed 5.9 per cent in May, following a 5.5 per cent fall in April.

But momentum fizzled as shareholders turned their attention to Europe, and the likelihood that its leaders might produce something substantial to tackle the region's debt contagion.

The S&P/ASX 200 Index finished with a gain of 1.6 points at 4044.8.

Analysts said they had little hope that much would be achieved at the European summit.

"In the 2 years since the sovereign crisis in the eurozone began, there have been countless expressions of solidarity and support between member states, but very little . . . progress towards genuine closer integration," HSBC Global's chief economist, Janet Henry, said in a note to clients.

"The markets are desperately hoping, even if they are not expecting, that the meeting . . . will provide some long-awaited clarity on what the future path of eurozone integration might be."

Energy stocks weighed heavily on the benchmark index, with oil and gas producer Santos dropping 59? (5.3 per cent) to $10.45 after it said the cost of its Gladstone liquefied natural gas project had risen 15 per cent.

BHP Billiton climbed 13? to $30.73 and Rio Tinto rose 8? to $55.16.

Among the big banks, Commonwealth rose 47? to $52.62 but NAB was 4? weaker at $23.34, ANZ lost 4? to $21.50 and Westpac shed 10? to $20.82.

News Corp rose 87?, or 4.1 per cent, to $22.37 on reports from the US that the board had approved the split of its entertainment and publishing divisions.

Shares in Caltex rose 13? to $13.28 on its bullish earnings forecast.

The dollar jumped half a US cent in early morning trade on aggressive buying by US investment bank Goldman Sachs that caught the market off guard. It finished at US101.15?, up from US100.55?.