The crumbling Western nation support for action against Syria and firmer US GDP data provided the perfect set-up for a fund manager month-end window dressing ramp that lifted the Australian sharemarket firmly into the black.
The S&P/ASX 200 index opened in the red, tracked sideways for much of the morning but it ramped to close 42.6 points, or 0.84 per cent, at 5135 points as investors rotated to defensive high yielding stocks ahead of the US long weekend and the release of Chinese manufacturing data.
Oil dropped $US1.50 to $US114.30 a barrel as war jitters eased after the UK Parliament voted against a strike on Syria.
Gold was steady at $US1410 an ounce and copper fell another one per cent to $US7190 a tonne.
The Australian dollar was trading at US89.40 cents.
The US dollar rallied overnight against most currencies after June-quarter GDP was revised up from 1.7 per cent to 2.5 per cent, raising the prospect of the US Federal Reserve beginning to taper its bond purchases next month, despite economists remaining unconvinced about the relevance of the revision or the growth momentum in the world’s biggest economy.
The GDP upgrade was driven by a build up in inventories and a smaller trade deficit.
A dip in weekly jobless claims helped push US 10-year bond yields 5 points higher to 2.77 per cent, while Australian 10-years were unchanged at 2.90 per cent.
The Shanghai composite index was up 0.5 per cent at the close of the ASX.
In Tokyo the Nikkei index was down 0.5 per cent.
Emerging markets extended their recoveries, but trade remained volatile.
Royal Bank of Scotland currency strategist Greg Gibbs said traders had noted the the emerging market rout had continued despite the 20 points pull back in US yields from a peak of 2.92 per cent.
He said the conclusion was that “the exit from EM currencies combined with the beginning of the withdrawal of QE stimulus has far-reaching ramifications that the market is only starting to realize”.
The broader All Ordinaries index was up 42.2 points, or 0.83 per cent, at 5125.3.
On the ASX 24, the September share price index futures contract was 40 points higher at 5116 with 25,350 contracts traded.
Shares were buoyed by a firmer lead from Wall Street, which was boosted by better than expected US economic growth figures and the British parliament’s vote against strikes in Syria, CommSec analyst Steve Daghlian said.
"We’re taking on that lead from global markets and that conflict in Syria has been a big driver for oil prices,” Mr Daghlian said.
"The fact the British parliament voted against using force in Syria has played a part to ease concerns that there might not be a strike over the next couple of days, which has been a positive for markets."
The rise continued a recovery by local stocks since a mid-week slide caused by the Syrian conflict.
But oil and gas giant Woodside, which is looking to invest in gas fields near Israel, was still impacted, losing three cents to $38.18.
Among the miners, BHP Billiton gained 40 cents to 35.75 and Rio Tinto added five cents to $58.30.
Gold miner Newcrest was down 19 cents at $13.26 but iron ore miner Fortescue gained two cents to $4.33.Shares in uranium miner Paladin rose by 5.7 per cent to 56 cents as it plans to boost production and push ahead with the partial sale of its mine in Namibia.
The big four banks finished higher, with ANZ up 22 cents at $29.69, Commonwealth Bank gained 79 cents to $72.84, National Bank added nine cents to $32.45 and Westpac was 17 cents higher at $31.39.As reporting season came to a close, electrical and homewares retailer Harvey Norman posted a fall in profit but said sales had increased in recent months.
Its shares gained 13 cents to $3.01.
In other earnings news, shares in Virgin Australia fell 1.5 cents to 39 cents after it fell to an annual loss of $98.1 million.National turnover was 1.6 billion securities worth $5.8 billion.