“It has been a good couple of weeks, so we saw a little profit-taking today. Things are improving, US jobless claims were lower overnight...we’re lifting out of the gloomy days,” said Macquarie Private Wealth's Lucinda Chan.
However, Ms Chan said steeper gains were capped as a stronger Australian dollar “discourages foreign funds into the market”. The Australian dollar recently traded at $US1.0791.
Miners were among the day’s best performers. Fortescue Metals rose 2.4 per cent, BHP Billiton added 0.4 per cent and Aquila Resources climbed 4.6 per cent.
Steelmaker OneSteel advanced 3.4 per cent.
Leighton shares gained 2.6 per cent amid conflicting reports on the progress of Iraq bribery allegations.
QBE Insurance advanced 2.3 per cent after UBS upgraded the insurance company to 'buy'.
Energy stocks pulled back after recent strength, and Woodside Petroleum traded down 0.4 per cent as Santos lost 1.5 per cent.
Oil futures briefly topped $US110 a barrel in New York yesterday after reports, later denied by Saudi Arabia, that some oil pipelines in the country had been destroyed in explosions.
“Oil prices are freaking the market out, but considering how strong the energy stocks have been this week, we’ve just seen some profit taking,” Ms Chan said.
The gains for the Australian market today followed a small rise on the US bourse overnight, after weekly jobless claims fell to the lowest level since March 2008. Wall Street's gain also followed France and Spain's successful government bond auctions.
"Italian, Spanish and French bond yields have now fallen to new lows for the year, adding to confidence that the (European) debt crisis is being contained," said Shane Oliver, head of investment strategy at AMP Capital Investors.
Overnight, a trade body ruled that Greece’s debt restructuring didn’t qualify as a “credit event” and therefore would not trigger credit default swap payouts.
Banks were mixed in Sydney trading today - ANZ was up 1.4 per cent and Westpac rose 0.3 per cent, while National Australia Bank lost 0.4 per cent.
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