Resources retreat, but market rises on strength of big banks

The sharemarket closed nearly half a percentage point higher as strong gains among the big banks offset falls by several resource companies.

The sharemarket closed nearly half a percentage point higher as strong gains among the big banks offset falls by several resource companies.

At the close, the benchmark S&P/ASX 200 Index was up 21.8 points, or 0.43 per cent, at 5100. The broader All Ordinaries was up 21.5 points, or 0.42 per cent, at 5090.3.

IG Markets institutional dealer Chris Weston said there was no real explanation for why the big four banks were all higher.

"It's been a tale of some sort of variance in the mining space, but banking stocks have really been on fire and that's really why the market's been moving up," he said. "There's no real smoking gun."

He said investors were keeping an eye on the flight of capital from emerging Asian markets to the US and European markets.

"The prospect of a negative situation in that region is really escalating," he said.

Among the banks, NAB gained 57¢ to $32.14, Commonwealth Bank added 83¢ to $71.10, ANZ was up 17¢ at $29.73, and Westpac rose 15¢ to $31.29. Macquarie Group gained 80¢ to $44.60.

In the resources sector, BHP Billiton dropped 80¢ to $35.74, after its weaker than expected annual profit result announced late on Tuesday.

Oil and gas outfit Woodside also fell, despite a rise in its half-year profit due to strong production from its huge Pluto gas plant. Its shares dropped 60¢ to $38.10.

Other energy and mining stocks performed better, with Rio Tinto gaining 9¢ to $59.60, Fortescue added 4¢ to $4.09, and Oil Search was 4¢ higher at $8.25.

The dollar traded largely flat, ending at US90.36¢, from US90.45c on Tuesday.

Currency traders were looking to the Federal Open Markets Committee minutes (out early Thursday, Australian time) for indications of whether the US Federal Reserve will start winding back its $US85 billion-a-month bond-buying program in September.

Any talk of tapering was likely to push the Australian dollar lower, CMC Markets foreign exchange dealer Tim Waterer said.

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