The Australian sharemarket almost reversed yesterday's loss after Chinese manufacturing data offset fears the world's second biggest economy was in the grip of another cash crunch.
The S&P/ASX 200 index was struggling for upside momentum but rallied to close 16.8 points, or 0.31 per cent, up at5372.9 points, after the uptick in the HSBC flash PMI index to 50.8 points beat forecasts.
Sentiment was tempered, however, by Chinese stocks that were mostly unimpressed with the news that a build-up in business inventories accounted for much of the improvement, while another sharp increase in interbank-lending rates also knocked sentiment.
"New export orders edged higher, but clearly under-performed the general trend," Westpac economist Huw McKay said. "At 50.8, the survey is consistent with weakly expanding world trade, noting that China is now the world's largest exporter, making it as useful a proxy as any of underlying global trends."
The Shanghai composite index was down 0.2 per cent at the close of the ASX after the seven-day repo - repurchase agreement - rate jumped another 67 points to 4.67 percent, the biggest jump in two months, as the central bank withheld liquidity to finance shadow banking activities.
In Tokyo the Nikkei index was down 0.6 per cent.
The Australian dollar climbed from an overnight low of US96.15 cents to US96.50 cents on the Chinese data and comments by Reserve Bank deputy governor Philip Lowe that record-low interest rates, weaker currency and improving sentiment should help revive growth in industries outside resources.
Overnight US stocks fell as the earning outlook deteriorated and house prices rose at the slowest pace in 11 months.
Mining bellwether Caterpillar's profit report fell well short of forecasts and the company downgraded profit guidance by about 15 per cent, saying there was a "good deal of uncertainty worldwide" and "very low" mining machinery orders.
Gold was steady at $US1335 an ounce and copper pared its overnight 2.2 per cent slump, rising 0.4 per cent to $US7200 a tonne. On Wednesday spot iron ore was unchanged at $US133.30 a tonne.
The nation’s biggest bank, Commonwealth, surged to a record high as the bank reporting season approaches.
IG market analyst Stan Shamu said the local market had outperformed the region following falls in China and Japan.
"Locally we have seen a situation where the banks have come to the front again and really driven the gains for the day,” Mr Shamu said."The rest of the sectors had very mixed performances."
Investors appeared to be optimistic ahead of the release of ANZ and National Australia Bank’s full-year results next week."
Commonwealth Bank of Australia, the nation’s biggest bank by market value, finished at a record high share price of $75.58. The other three major banks all performed well.
The big miners were mixed as commodity prices dipped and China’s top lenders reportedly wrote off about $US3.7 billion ($A3.86 billion) in bad debt for the first six months of 2013, leading to a spike in Chinese interbank lending rates.
BHP Billiton, the world’s biggest miner, lost 15 cents to $37.35, after three days of gains.
Fortescue Metals Group fell five cents to $5.30 while gold miner Newcrest shed 18 cents to $10.91.
After a lacklustre start, Rio Tinto gained 20 cents to $63.85. In the banking sector Commonwealth Bank added 97 cents, or 1.3 per cent, to $75.58, as Westpac gained 31 cents to $34.18, ANZ rose 40 cents to $32.37 and National Australia Bank jumped 12 cents to $35.59.
Meanwhile, Wesfarmers lost 8 cents to $41.92 even though its Coles’ supermarket chain and liquor stores sold $6.9 million worth of goods during the September quarter, an increase of more than 4 per cent.
The broader All Ordinaries index was up 16.9 points, or 0.32 per cent, at 5,373.7.
The December share price index futures contract was 19 points higher at 5,365, with 20,491 contracts traded.National turnover was 1.5 billion securities worth $3.7 billion.