Stocks at highest since early May

THE sharemarket climbed back above the 4300-point level yesterday, for the third-consecutive day of gains, after Europe's leaders appeared to be getting closer to reducing Spain's and Italy's borrowing costs, and as calls grew for the US Federal Reserve to launch more stimulus.

THE sharemarket climbed back above the 4300-point level yesterday, for the third-consecutive day of gains, after Europe's leaders appeared to be getting closer to reducing Spain's and Italy's borrowing costs, and as calls grew for the US Federal Reserve to launch more stimulus.

Financial, mining and energy stocks did the heavy lifting as investors pushed aside concerns that rating agency Standard & Poor's had put Greece on a "negative" outlook.

Financial stocks gained nearly 1 per cent, with Commonwealth Bank the standout performer, jumping 77? to $57.59.

The S&P/ASX 200 Index closed up 21 points, or 0.49 per cent, at 4312.6. It was the highest close since early May.

Analysts said they had noticed a more positive attitude to the sharemarket in recent weeks, with 13 of the past 19 days finishing in the black.

Despite some negative news from Europe German factory orders contracted by 1.7 per cent month-on-month in June, while Italian gross domestic product showed a 2.5 per cent contraction year-on-year in the June quarter the Australian market continued to benefit from last week's news that more US jobs were created in July than expected. Positive leads from Europe and the US also helped stocks.

"One of the key drivers of the market is [the] improved sentiment that the Europeans are going to find a solution for borrowing costs for countries like Spain and Italy," said Ord Minnett analyst Craig Turton.

"You can see that in the Spanish two-year bond. Since July 4, the yield on the two-year bond is down more than 300 basis points," he said. "The European market's been the strongest of late, and Spanish banks have been rallying very hard."

As the profit season heated up yesterday, Computershare was among the big movers, adding 6.1 per cent after it announced a $156.5 million annual profit.

Among the miners, Rio Tinto rose 4? to $54.89 after the company delivered its first-half results.

BHP Billiton firmed 12? to $32.28 while Fortescue Metals rose 12? to $4.52.

Among the big banks, Westpac gained 45? to close at $24.13, ANZ was up 9? at $23.75 and National Australia Bank was 32? higher at $25.62. With AGENCIES

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