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Aussie shares almost 1% higher ahead of ECB meeting

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The Australian share market is almost one per cent higher as investors find value amid hopes of a resolution to Europe’s debt crisis.

At 1205 AEST on Thursday, the benchmark S&P/ASX200 index was up 41.5 points, or 0.97 per cent, at 4,330.8, while the broader All Ordinaries index was up 39.3 points, or 0.91 per cent, at 4,337.3.

On the ASX 24, the September share price index futures contract was up 37 points at 4,332.2, with 18,047 contracts traded.

CMC Markets analyst Michael McCarthy said reports of possible European Central Bank (ECB) action were driving buying.

“The market appears to be expressing confidence in the leadership of European Central Bank (ECB) Governor Mario Draghi,” Mr McCarthy said.

Spanish and Italian bonds have rallied sharply ahead of the ECB’s policy meeting on Thursday night (Australian time), fuelled by renewed expectations the central bank will unveil a plan for large-scale, sterilised bond-buying and could cut rates.

Mr McCarthy said the major appeal was severe fiscal conditions which could clear the way for German agreement.

In local economic news, Qantas said it had agreed a 10-year partnership with Emirates which, from April, will result in Qantas shifting its European hub to Emirates’ home airport in Dubai and includes reciprocal frequent flyer benefits.

Qantas shares were five cents, or 4.44 per cent, higher at $1.175 at 1201 AEST.

Billabong shares rose 9.5 cents, or 7.4 per cent, to $1.365 after the clothing retailer said it would formally consider a takeover after receiving its second offer in the space of six weeks.

Among the big miners, BHP Billiton was 24 cents stronger at $31.29 and Rio Tinto was up 75 cents at $50.09.

Fortescue Metals Group, suffering continued concerns over its about-face on expansion plans and the falling iron ore price, was 21 cents, or 6.73 per cent, lower at $2.91.

Lynas Corporation shares were up 23 cents, or 38.65 per cent, at 82.5 cents after the company was granted a temporary licence for its controversial $US800 million ($A785.58 million) rare earths refinery in Malaysia.

National turnover was 935 million securities worth $2.1 billion, with 468 stocks up, 305 down and 301 unchanged.