Shares surge as US breaks debt deadlock

The US President, Barack Obama, said the deal would cut about $US1 trillion in spending over 10 years and avoid a default, which would have had a devastating effect on global markets.

The benchmark S&P/ASX200 index rose by 73.2 points, or 1.65 per cent, to 4497.8. The broader All Ordinaries index was up by 72.6 points, or 1.61 per cent, to close at 4573.1.

A dealer with IG Markets, Chris Weston, said the US debt deal had bolstered regional markets. "Asian markets are very buoyant and the futures are predicting a pretty good relief rally in the US overnight."

The deal needs Congress's approval, including the establishment of a bipartisan congressional committee, which is to report back by November with a proposal to further reduce the deficit.

"The big question is, do we get that downgrade to US debt," Mr Weston asked. "While it's a good situation that we've avoided default, people are reluctant to take sizeable bets, so we're probably seeing a bit of short covering on the back of that."

Locally, resources companies and banks were the main beneficiaries of brighter investor sentiment.

National Australia Bank rose 49?, or 2.04 per cent, to $24.49, ANZ rose 46?, or 2.2 per cent, to $21.29, Commonwealth Bank rose 82? to $50.09 and Westpac rose 39? to $20.81.

Resources stocks were higher, with BHP Billiton gaining 88? to $42.30 and Rio Tinto $1.52 higher at $81.52. Other big movers were Fortescue Metals, up 20?, or 3.3 per cent to $6.51, and Lynas, up 8? to $2.23. Macarthur Coal rose 28? to $15.83 after it told shareholders to take no action after Peabody Energy and ArcelorMittal confirmed a $15.50 a share takeover offer.

Telstra submitted details of its structural separation, required as part of the rollout of the national broadband network, with the competition regulator. Its shares rose 3? to close to $3.02.

WINNERS LOSERS

WINNERS

Bow Energy 9.80%

Kagara 9.02

Karoon Gas 7.05

Bathurst Resources 6.67

Pacific Brands 6.15

Energy World Corp 6.06

White Energy Co 5.61

ERA 5.45

Atlas Iron 5.19

Duet Group 5.16

LOSERS

OceanaGold cdi -4.22%

Reject Shop -1.57

AWE -1.20

Australand Property -1.20

Sundance Resources -0.95

Aurora Oil & Gas -0.63

SP AusNet -0.54

OM Holdings -0.54

Gryphon Minerals -0.53

Alacer Gold Corp -0.45