Whitehaven-Aston merger bolsters market

The benchmark S&P/ASX200 rose 49.8 points, up 1.18 per cent, to 4203. It has now gained 5.4 per cent in value in the last two weeks. The broader All Ords rose 47.3 points, up 1.1 per cent, to 4264.1.

In the biggest announcement of the day, Whitehaven Coal said it would acquire Aston Resources for $2.25 billion, putting it among Australia's biggest listed coal groups.

Billionaire Nathan Tinkler, Aston's biggest shareholder, is supporting the deal, agreeing to swap his 32 per cent stake in Aston for shares in Whitehaven. Aston shares rose 14? to $9.90, up 1.43 per cent on the news, but Whitehaven shares dropped 8?, or 1.37 per cent, to $5.74.

Meanwhile, industrial and retail conglomerate Wesfarmers dropped 58?, or 1.84 per cent, to $30.90 after amendments to its contracts with BlueScope Steel left it facing a $190 million writedown in its Coregas business.

The major banks performed strongly, led by Commonwealth Bank, up 2.03 per cent to $49.83, and NAB, up 1.42 per cent to $24.36.

The local bourse opened strongly and remained buoyant all day, despite official figures showing October's trade surplus was less than economists had expected.

The $1.6 billion surplus was down $654 million on September, with imports rising sharply. Exports are now up 11.6 per cent on the year, while imports are up 17.2 per cent.

Other figures from the Bureau of Statistics show home-loan approvals rose in October for the seventh straight month, before the Reserve Bank cut interest rates by 0.5 percentage points.

But loans for home construction fell 1.8 per cent, the fourth fall in five months. "Presumably home building will get a lift from the recent rate cut," Commonwealth Securities chief economist Craig James said in a note.

"But the current data is hardly positive for the home-building industry. Population is rising but we aren't adding to the housing stock, suggesting that established home prices will soon flatten and then start edging higher again."