Australian shares closed firmly higher on positive offshore leads and short-covering ahead of the weekend.
An afternoon rally led to the firmer finish and prompted analysts to wonder whether the worst case for Europe’s debt crisis had already been priced into the market.
On Friday, the benchmark S&P/ASX 200 index was up 52.4 points, or 1.23 per cent, at 4,296.5 points, while the broader All Ordinaries index put on 51.3 points, or 1.19 per cent, to 4,358.6 points.
Key Wall Street indices rose about one per cent overnight on positive US jobless figures and as the European Central Bank pledged support for Italian government bonds.
The bond yields have risen to unsustainable levels, fuelling worries that Italy could default on its sovereign debt.
CMC Markets chief market strategist Michael McCarthy said the Australian market rallied from around noon.
“While there’s no doubt that short-covering contributed to the rally that we saw, one of the questions that we’ve been asking here and heard across the desk is, `have the markets already priced in a worst case scenario in Europe?’,” Mr McCarthy said.
He said the Australian share market was 15 per cent below levels of earlier this year, so risks appear to have shifted to the upside.
There were about 30,000 contracts traded on the December share price index (SPI) futures contract compared to an average of 37,000.
The December SPI was up 45 points at 4,309 points.
National turnover was 1.7 billion shares worth $3.9 billion.
Mr McCarthy said industrials were the top performing sector.
Brambles was up 24 cents, or 3.61 per cent, at $6.89, QR National gained nine cents, or 2.69 per cent, to $3.44, Qantas added 3.5 cents, or 2.22 per cent, to $1.615, Toll gained 20 cents, or 4.15 per cent, to $5.02 and Transurban put on 11 cents, or 2.06 per cent, to $5.46.
In the headlines on Friday, construction firm Leighton Holdings reaffirmed its forecast for a full year profit of up to $650 million.
Leighton chairman Stephen Johns said the company would not pay former chief executive Wal King a $5 million transition bonus.
Leighton shares changed direction to close six cents higher at $20.18 after falling as low as $19.91.
The energy sector also fared well, with Santos climbing 38 cents to $13.56, while Woodside appreciated 53 cents to $36.28.
A lowlight was Fairfax after John B. Fairfax on Thursday sold his stake in the media group, ending his family’s 170 year association with the company they founded.
Fairfax shares were down 6.5 cents, or 7.03 per cent, at 86 cents after 82.8 million of the company’s shares changed hands, making it the biggest mover by volume.
“The market appears to have taken this as insider signalling,” Mr McCarthy said.
“If anybody knows something, it’s the family, and them getting out is not a good sign.
“There were very high volumes, which suggests a fair bit of that placement was placed with short-term focused trading groups rather than long-term holders.”
The price of gold in Sydney closed at $US1766.23 per fine ounce, up $US5.44 from $US1760.79 on Thursday.
Stocks that finished higher totalled 628, while 351 were down and 391 were steady.
