Shares hit three-week high as global gloom recedes
'There's still a bit more negative earnings news to flow through.' Peter Esho, City Index
LOCAL shares rose for the second day to a three-week high after strong economic data from the US and Europe kicked off the year.The market got a boost from strong gains in US equities as manufacturing and construction in the world's largest economy expanded at a faster pace than analysts had predicted.Investors, keen to shrug off the gloom of last year, also cited market beating manufacturing data from China and a fall in unemployment in Germany as signals the global economy might be due to bounce back."Traders seem to have entered 2012 recharged, optimistic and seemingly ready to see the world through fresh eyes," IG Markets' Chris Weston said. "The risks are still very real, despite a good start to 2012, but the tape, for the time being looks positive and this will encourage further short covering."At the close yesterday, the benchmark S&P/ASX 200 index was up 86.6 points, or 2.1 per cent, at 4187.8, and the All Ordinaries Index was up 84.3 points, or 2 per cent, at 4239.5, the highest since December 14.Miners led the pack higher, adding 3 per cent after metals prices climbed overnight.BHP Billiton surged 4.1 per cent to $36.22 while Rio Tinto climbed 2.9 per cent to $63.15, both closing at a three-week high.City Index's Peter Esho said the boost was down to commodities prices "making up for their underperformance last year." But he cautioned the sharp gains were unlikely to be sustained for long. "There's still a bit more negative earnings news to flow through the market."Energy stocks climbed after US oil prices rose to their highest point since May, fuelled by concerns over a supply disruption from Iran. Santos added 2.5 per cent to $12.65 and Woodside rose 2.3 per cent to $31.40.Bandanna Energy ended up 1.6 per cent at 62? after the coal explorer announced it was hoping to get funding to develop its mines in Queensland's Bowen Basin as it pursued discussions with third parties.Even the financial sector found some joy, gaining 1.8 per cent, despite investor concerns the imminent rollover of $120 billion of debt in Europe could put pressure on banks' funding sources. The big four banks added 0.8 per cent to 1.9 per cent.Insurance Australia posted only muted gains of 0.7 per cent to $3.05 after it announced it secured $4.7 billion of reinsurance this year, up from $4.1 billion last year.