Modest gains across board

THE sharemarket has finished slightly higher, with modest gains across the board as investors looked overseas for leads.

The benchmark S&P/ASX 200 Index added 10.2 points, or 0.2 per cent, to 4719.7, while the broader All Ordinaries gained 11.9 points, or 0.3 per cent, to 4745.7.

Materials ended 0.1 per cent higher, financials and energy both added 0.3 per cent, while IT was the only sector to post a loss, slipping 0.2 per cent.

New home loan approvals slumped 0.5 per cent, defying expectations of a 0.5 per cent rise, while the ANZ job advertisements survey showed a drop of 3.8 per cent in December. Job advertisements are now 20 per cent below February 2012 levels.

"I suspect investors may be interpreting this as saying, 'Well, it makes it more likely we could see a rate cut' and therefore they're really having a careful look at those companies that pay a high fully franked dividend," said JBWere executive director Mike Kendall.

"Overall there seems to be a fairly solid level of confidence as we move through January that the recent gains in our market can be sustained," Mr Kendall said.

The local bourse got some support from regional markets, with most bourses trading higher and Shanghai soaring more than 2 per cent.

Locally, banks were mixed. CBA jumped 0.4 per cent to $61.63 and NAB added 0.7 per cent to $25.74. ANZ slipped 0.2 per cent to $25.21 and Westpac fell 0.3 per cent to $26.50.

The big miners were also mixed, Rio Tinto added 0.3 per cent to $65.99, while rival BHP lost 0.3 per cent to $36.57. Smaller resource companies saw significant gains, Aquila Resources jumped 7.1 per cent to $3.16 and Iluka Resources rose 6.5 per cent to $9.49.

Iron ore, which has surged from $US115.30 at the beginning of December to $US158.50 last week, saw a slight drop to $US154.90 late Friday. Despite the drop, Deutsche Bank economist Phil O'Donaghoe said iron ore maintained a positive outlook for the first quarter of 2013.

Deutsche Bank commodity analysts expect the iron ore price to reach $US170 in the coming weeks.

However, they also noted that the 18 per cent rise in iron ore since July 1, 2012, has not been matched by jumps in coking coal or Chinese steel prices, 28 per cent and 7 per cent lower than July 1 respectively.

"This would suggest gains in iron ore are more related to temporary factors in the market and not a . . . widespread increase in Chinese activity," Mr O'Donaghoe said.

Media enjoyed a good run, with Ten Network rising 6.5 per cent to 33¢, APN News Media up 5.7 per cent to 28¢ and Fairfax Media adding 1.9 per cent to 55¢. Seven West Media fell 3 per cent to $1.78.