Relief at Greek bailout deal lifts stocks

AGREEMENT on a second bailout deal for Greece buoyed the sharemarket yesterday, with all sectors closing higher.

AGREEMENT on a second bailout deal for Greece buoyed the sharemarket yesterday, with all sectors closing higher.

The S&P/ASX 200 Index put on 35.1 points, or

0.82 per cent, to 4291.2.

The news reached the market at about 2pm, immediately lifting stocks.

The deal is designed to reduce the ratio of Greek government debt to gross domestic product to

120.5 per cent by 2020. It will also force private holders of Greek debt to take a 53 per cent write-down on their investments.

Patersons Securities associate director John Curtin said the news was key to the market's performance.

"The positive is that they've got the deal done unlike other deals earlier than the deadline. So, that's going to be good for confidence," he said.

"It also gets it out of the way because the next big hurdle now will be looking at the Italian bond renewal that needs to be done by the end of March."

Metals markets climbed on the news, driving BHP Billiton 42?, or 1.2 per cent, higher to $36.44. Rio Tinto gained $1.12, or 1.7 per cent, to $69.16.

"It's really the classic case that the top end of our market is positively affected," Mr Curtin said.

The big banks strengthened, National Australia Bank leading the way with a gain of 22?, or 1 per cent, to $23.40.

Commonwealth Bank performed strongly, almost matching Monday's fall when the shares went ex-dividend. The shares finished 37? higher at $49.47. "Within two days they've nearly clawed back all of the dividend," Mr Curtin said.

Wesfarmers yesterday traded without its 70? dividend but also clawed back most of the fall to finish just 20? lower at $29.65.

OneSteel, Australia's second-biggest steel maker, surged 9?, or 12.3 per cent, to 82? after it posted a $74 million first-half net loss but said it was bullish about growth through its mining interests.

Train manufacturer and engineering company Downer EDI gained 22?, or 5.9 per cent, to $3.94 after it reported a return to profitability, helped by strong gains in its mining division, and said it expected solid results this year.

Spot gold was up $US3.94 at $US1739.55 an ounce. Newcrest rose 20? to $35.10.

At 5pm, the dollar was at $US1.0738, down from Monday's close of $US1.0777 despite the deal on Greece's next round of bailout funds.

"The market kind of expected it," said Commonwealth Bank currency strategist Joseph Capurso. "The euro's climbed a little bit, but only by about half a cent or so."

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