London and New York spoil party

Stocks were expected to get a boost from the dramatic decision - particularly after the public holiday forced traders to miss out on Monday's regional rally - but weak offshore leads from the US (down 1.3 per cent) and London (flat) dampened expectations, and the bourse barely stumbled across the line, closing only slightly higher.

The S&P/ASX200 index closed up 9.2 points, at 4072.9 points, while the All Ordinaries index was up 7.1 points at 4118.4.

Analysts said the fact that Spain's capital shortfall would be addressed with a rescue plan had caused relief for investors, but they remained sceptical about the plan because any extra funding for the Spanish government would increase its already high debt to gross domestic product ratio, which is currently 68.5 per cent - though it is still well below Greece (165 per cent), Italy (120 per cent), Ireland (108 per cent) and Portugal (107 per cent).

Bill Bovingdon, the chief investment officer from Altius Asset Management, said the effort to save Spain's banks had boosted risk appetite, but it was only temporary.

"There's a degree of scepticism building in financial markets because they want to see something a bit more enduring rather than just another just-in-time measure that prolongs the agony," he said.

"There's concern about the conditions surrounding the bailout package, and obviously we still have a fair-sized hurdle coming up this weekend with the Greek elections."

National Australia Bank's business survey found conditions and confidence had taken a turn for the worse in May. It showed a fall in both indices to nine-month lows, with conditions deteriorating to -3.5, from -0.1, and confidence dropping to -2.2 from 4.1.

However, analysts disagreed about its significance. Alvin Pontoh, the Asia-Pacific macro strategist for TD Securities, said the fall in both indices was likely exaggerated by negative global headlines, so not too much should be read into them.

But the UBS economists Scott Haslem and George Tharenou said the data should cause a rethink of last week's stronger-than-expected GDP figures.

"Today's NAB business survey really does question the 'reality' of the Q1 data," they wrote in a note to clients.

"While Reserve Bank governor Stevens's comments last week suggested the underlying economy ... is around trend ... the slump in business conditions in recent months suggest that growth slowed further in Q2, to a well below trend pace."

Concerns about the situation in Europe led to pressure on resource stocks. BHP Billiton fell 19? to $31.72 and Rio Tinto fell 94? to $54.65.

But banks and financial stocks ignored the concerns. Commonwealth Bank led the charge, rising 35?, or 0.7 per cent, to $50.82. ANZ Bank rose 21?, or 1 per cent, to $21.77. AMP was also stronger, rising 10? to $3.91.

Qantas regained some lost ground, its shares rising 10.5?, or 10.8 per cent, to $1.075, on news the airline was monitoring potential takeover attempts - as a slumping share price raises the prospect of private equity or other parties making a move - with an internal task force.