Trade data and private equity action bring cheer

Exports from Australia's largest trading partner rose 13.4 per cent in December compared to a year earlier, as Japanese and emerging markets boosted demand for Chinese goods, government data showed.

The figures built on a promising start to the US earnings season, spurring hopes the global economy could start to emerge from the downturn this year.

"Together with December's rebounding [manufacturing data] we think that the economy has started to stabilise, and is likely to find a soft landing in the first quarter of 2012," ANZ Bank said.

At the close yesterday, the benchmark S&P/ASX 200 index was up 46.8 points, or 1.1 per cent, at 4152.2, while the All Ordinaries rose 45.1 points, 1.1 per cent, to 4206.6.

Markets also took heart from news of a further increase in private equity deals.

Shares in the clothing manufacturer Pacific Brands rose 8? to 64? after it confirmed it had received an unsolicited takeover approach from the US private equity firm KKR. The offer "added a bit of spark to an otherwise lacklustre market", EL&C Baillieu's stockbroking director, Richard Morrow, said.

On Monday the contract cleaner Spotless Group told its suitor, Pacific Equity Partners, a $743.4 million offer would be needed to obtain a unanimous recommendation from the board.

Its shares fell 0.8 per cent to $2.35 after PEP hinted it would not raise its offer. PEP said it could not progress its proposal without access to due diligence.

Materials and energy stocks rose 1.7 per cent as investors gained appetite for riskier investments.

Alumina rose 6.85 per cent to $1.17, helped by the positive leads from its joint venture partner, Alcoa, which opened the US reporting season by delivering results ahead of market consensus.

A CMC Markets analyst, Ric Spooner, said investors would be watching the US earnings season over the next month before the Australian reporting season began in February.

"If these signs of improved demand translate into better than expected revenue growth for companies, it will become difficult for investors to ignore equities at current earnings multiples," he said.

Property trusts also received a boost from government data showing Australian residential building approvals rose 8.4 per cent to 11,424 units in November, above forecasts.

The spot price of gold closed at $US1619.75 per ounce, up $US8.75.