Market breaks losing streak but confidence shaky

Strong US retail sales figures boosted investor sentiment.

THE sharemarket ended its recent losing streak with firm gains yesterday as hopes mounted that European leaders were closer to finding a solution to the region's debt crisis.

However, an IG Markets strategist, Stan Shamu, warned it could just be a relief rally in what will prove to be a prolonged bear market. After hitting a seven-week low on Friday, the benchmark S&P/ASX200 index rebounded to close up 73.9 points, or 1.85 per cent, at 4058.2. The broader All Ordinaries rose 68.2 points, or 1.68 per cent, at 4125.8.

Mr Shamu said a report suggesting that the International Monetary Fund could offer Italy financial aid boosted investor sentiment, although some analysts said the IMF did not have the resources. Strong US Thanksgiving retail sales figures also boosted investor sentiment.

Mr Shamu said financial and materials stocks led the gains on the local market yesterday, though volumes remained thin.

National Australia Bank was the strongest of the major banks, rising 92?, or 4.22 per cent, to $22.74.

Westpac jumped 76?, or 3.9 per cent, to $20.26, Commonwealth Bank rose $1.50 to $46.89, and ANZ closed 43? higher at $19.20.

Among industrial stocks, Transurban rose 15? to $5.47, while Brambles was up 13? at $6.84.

National carrier Qantas forecast a fall in first half profits due to higher fuel costs and the impact of industrial disputes. The shares rose 5? to $1.505.

Global miner Rio Tinto said market sentiment had worsened in recent months because of Europe's debt woes and economic weakness in the US. Rio shares rose $1.32 to $63.27.

BHP Billiton has promoted the head of its diamond division, Graham Kerr, to be chief financial officer, replacing Alex Vanselow. BHP's chief executive, Marius Kloppers, said the European debt crisis was hampering trade finance. The shares rose 80? to $34.85.

Rare earths miner Lynas Corp was the best performing stock among the top 50, rising 6.8 per cent to $1.175.

Woodside Petroleum fell 76? to $32.60 following the downgrade of oil and gas production targets.

The spot gold price was $US1705.80 an ounce, up $US19.47. Goldminer Newcrest rose $1.08, or 3.2 per cent, to $34.50.

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