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Markets soar after euro action

AUSTRALIAN shares ended sharply higher yesterday after European leaders agreed that eurozone banks could be

AUSTRALIAN shares ended sharply higher yesterday after European leaders agreed that eurozone banks could be

recapitalised without adding to government debt, soothing fears over growing credit strain in Italy and Spain.

Global markets cheered the

eurozone emergency action,

immediately soaring when the plan was announced early in the

afternoon Australian time.

"Just when everyone was

preparing for a boring end to the week and the financial year, a few EU summit headlines have jolted the market out of its malaise," said IG Markets analyst Cameron


The S&P/ASX 200 Index rose

49.8 points, or 1.2 per cent, to 4094.6, after trading in negative

territory in the morning session.

The dollar jumped as well,

climbing on the news to just shy of US102?, from as low as US99.96? in early morning trade.

CMC Markets chief market

analyst Ric Spooner said the news from the European leaders' summit was encouraging but did not mark the conclusion of the eurozone's woes.

"They've been positive

developments as I see them, but it is an incremental step," Mr Spooner said.

Most sectors ended sharply higher, with materials and energy leading the gains, rising 2 per cent and 1.6 per cent respectively, while financials rose 1.2 per cent.

Consumer discretionary stocks enjoyed a bumper day, after

upmarket retailer David Jones received a $1.65 billion takeover offer. The stock jumped 33?, or

14.6 per cent, to $2.59, while Myer climbed 7.5?, or 4.9 per cent, to $1.615 and Harvey Norman rose 54?, or 2.6 per cent, to $1.95.

The takeover bid helped market sentiment, Mr Spooner said, coming as it did at a time when prices were low. Such events were "a reminder that you need to be careful about getting out of things at very low prices because somebody else will take advantage of it", he said.

Among the big miners, BHP

jumped 72?, or 2.3 per cent, to $31.44 and Rio gained $1.34, or

2.4 per cent, to $56.50. Fortescue rose 2?, or 0.4 per cent, to $4.90.

Grocery wholesaler Metcash was one of the day's biggest losers,

slumping 9.9 per cent, or 37?, to $3.37 after coming out of a trading halt following a capital raising.

Fairfax Media rose 1.5?, or 2.8 per cent, to 55.5? after major shareholder Gina Rinehart threw down a challenge to chairman Roger Corbett.

News Corp was down 34? at $22.03 following Thursday's rally on plans to split the company.

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