INVESTORS have welcomed news that Italy's cabinet, led by the new Prime Minister, Mario Monti, will pursue ?30 billion ($39.4 billion) of austerity and growth measures in an attempt to shore up the country's finances before Thursday's summit of European leaders.
That helped to propel the share market higher yesterday, building on last week's strong gains, after the Australian Labor Party voted on the weekend to end the ban on uranium exports to India, removing a hurdle to growth for producers such as BHP Billiton and Paladin Energy.
The benchmark S&P/ASX200 rose 33.3 points, or 0.78 per cent, to 4321.3, taking the index above 4300 points for the fifth time in four months. In the past six days, the index has rallied 8.7 per cent.
The Labor Party's decision on uranium sales will pave the way for the Gillard government to negotiate a nuclear-safeguards accord and pursue closer diplomatic ties with the country. Trade between Australia and India hit $18.4 billion last year.
Materials and energy led the charge on the local stock exchange as investors reacted positively to the news, with junior uranium miners outperforming their sector.
"There's some positive momentum, but we need some good news to keep it going," Cameron Peacock, a strategist at IG Markets, said. "The news from Italy helped us higher, but it could all unwind very quickly, as we've seen so often this year."
But it failed to excite the Australian dollar as traders held their breath before today's interest rate decision. Despite a small 0.5? rally in the morning, it settled on $US1.02.
Economists remained split on whether the Reserve Bank would cut rates, but markets were tipping a cut of a quarter of a percentage point. Rates were cut by that margin on Melbourne Cup day one month ago for the first time in 2? years.
Investors also await interest rate decisions from the European Central Bank and the Bank of England on Thursday, both highly anticipated.
Chinese inflation figures are due out on Friday. Investors will want to see if recent moves by central authorities to apply the economic brakes have been successful.
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