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Investors shrug off slump on Wall Street

DOMESTIC shares closed more than 2 per cent higher yesterday, making back losses from the previous two trading sessions as positive local economic news helped investor confidence.

DOMESTIC shares closed more than 2 per cent higher yesterday, making back losses from the previous two trading sessions as positive local economic news helped investor confidence.

The S&P/ASX200 index rose 107.9 points, or 2.7 per cent, to 4183.4, and the All Ordinaries index jumped 102.2 points, or 2.5 per cent, to 4262.9.

The market opened stronger, bucking a slump on Wall Street after the US Labour Day public holiday.

The Ord Minnett research analyst Ron Cameron said the market drifted higher after the Bureau of Statistics announced the economy had returned to growth. Gross domestic product was up 1.2 per cent in the June quarter, after the previous quarter's downturn because of summer floods and cyclones.

"The market was rallying a little before that, but notwithstanding they [GDP figures] came in above economists' expectations, which were just lowered the other day after net exports came in, so it gave the market a bit of enthusiasm and we've held gains for most of the day, which is quite encouraging," Mr Cameron said.

The financial and materials sectors led the market, up 2.9 per cent and 2.8 per cent, respectively. The major banks were higher, with National Australia Bank up 80? to $22.94.

Westpac gained 57? to $20.07, Commonwealth Bank rose $1.51 to $47.49 and ANZ rose 77? to $20.03.

Among the miners, BHP Billiton was up $1.35 at $38.23, and Rio Tinto was $2.19 higher at $70.60. Atlas Iron was the best performing stock, gaining 20?, or 5.7 per cent, to $3.74.

Investment bank Macquarie Group shares closed up 37? at $23.53 after it reduced its earnings guidance, saying it expected its first half profit to decline from a year earlier due to difficult trading conditions and a higher tax rate. Wesfarmers was 92? higher at $30.57 after Coles said it would source more cheese locally.

The spot price of gold in Sydney closed at $US1837.20 per fine ounce, down $69.43 from Tuesday's close of $US1906.63. National turnover was 2.3 billion shares changing hands for $5.26 billion, with 683 stocks up, 356 down and 339 steady, with only seven stocks in the ASX 100 trading lower.


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