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Aussie shares at 8-week closing peak

Australian shares jump 0.6 per cent to an eight-week closing high on Monday, with strong figures on the economy helping lift banks.

india Updated: Sep 04, 2006 15:48 IST

Australian shares rose 0.6 per cent to an eight-week closing high on Monday, with strong figures on the economy helping lift banks, while travel group S8 Ltd jumped to a record on an agreed takeover bid.

Australia's benchmark S&P/ASX 200 index rose 32.1 points to 5,129.2 -- its highest close since July 10 -- based on the latest available data. It gained 1.5 per cent last week.

Sentiment was underpinned from data showing resilience in the economy, now in its 15th straight year of expansion.

"It is indicative of an economy that is growing solidly, if not strongly," Steven Milch, head of economic research at St George Ltd.

New Zealand's benchmark NZX-50 Index added 17.6 points, or 0.5 per cent, to 3,532.3. The top stock, Telecom Corp. of New Zealand Ltd. added 0.7 per cent to NZ$4.28.

Australian figures showed approvals to build new homes jumped 8.3 per cent in July, far above forecasts, while gross operating profits at companies rose 3.3 per cent last quarter and businesses unexpectedly reduced inventories.

The top four banks, which account for about 22 per cent of the index, climbed as a strong economy pointed to more profit growth.

No.1 National Australia Bank Ltd, rose 0.8 per cent to A$36.21 and the second-biggest, Commonwealth Bank Ltd, gained 0.8 per cent to A$46.12.

Expectations of more takeovers also supported the market.

"One of the key themes in our market is corporate activity. It tends to be positive for investor sentiment," said Guy Hutchings, chief investment officer at MFS Investment Management.

S8 jumped 19.4 per cent to a record A$4.30 after property and tourism investor MFS Ltd agreed to buy S8 in a A$700 million ($538 million) deal. MFS shares fell 10.2 percent to A$3.87.

Automotive parts marker Repco Corp Ltd jumped 12.8 per cent to A$1.28 on speculation of takeover activity after 9.5 million shares, or nearly 5 per cent of the company's equity, changed hands after the close of Friday's trade.

But top beer maker Foster's Group Ltd, which rose last week on takeover speculation fell 15 cents, or 2.5 per cent, to A$5.95 on turning ex-dividend.

Companies geared to US growth benefited after jobs data in the world's biggest economy raised expectations of sustained profit growth for US-exposed companies.

Westfield Group, the world's top shopping mall owner by market value, added 1.2 percent to A$18.32. Westfield has about 45 percent of its retail outlets in the United States. Building products maker Rinker Group Ltd, which earns about 80 percent of profit from US, gained 2.5 per cent to A$14.09.

Tattersall's Ltd, Australia's top lottery operator, rose 2.2 per cent to A$3.29 after its annual net profit came in broadly in line with its forecast in its listing documents.

First Published: Sep 04, 2006 15:48 IST