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The Australian sharemarket rallied to break even for the year as dismal US retail sales data revived a rally over stimulus last night.

Following a dramatic turnaround in sentiment last night that left the S&P500 index 0.6 per cent higher, the S&P/ASX 200 index climbed 48.2 points, or 0.91 per cent, to 5356.3 as the investors again priced in a win-win outlook for the US economy.

In a choppy session the Australian dollar bounced around but settled US0.5 cents up to US90 cents as the US dollar fell against most major currencies except the yen.

However, pricing in a sober outlook and the softer yield outlook on the domestic economy 10-year Government bond yields dropped 4.9 points to 4.126 per cent.

Raising hopes the US Federal Reserve would soon "taper its tapering", US retail sales fell 0.4 per cent in January, far worse than the flat forecast, but the drop also came after sharp downward revisions to December's data.

Market pundits have blamed the severe cold weather in the US, but economists have since slashed US GDP growth forecasts to 1.9 per cent from the average consensus of 2.5 per cent expected just at the start of the year.

"January simply continues the ugly trend that we have seen really going back to the middle of 2012," Alhambra Investment Partners strategist Jeffrey Snider noted in a report. "The consumer is not resilient at all, instead stuck in a stasis comparable to previous recessionary periods."

The Shanghai composite index bounced 0.5 per cent at the close of the ASX.

In Tokyo the Nikkei index fell 1.3 per cent as the yen rallied, knocking exporters.

Gold climbed $US14 to $US1306 an ounce, copper edged up 0.3 per cent to $US7130 a tonne and spot iron ore rose 0.8 per cent to $US122 a tonne.

ANZ analysts noted that despite the bounce in global equity markets foreign investors continued to exit emerging Asian markets in the week to February 12, albeit at a slower pace.

Portfolio outflows "remained large" at $US2.2 billion, down from the previous week's $US 4.2 billion.

"The key takeaway is that improved risk appetite has benefited mainly developed markets while portfolio outflows from emerging markets continued," they said.

OptionsXpress market analyst Ben Le Brun said: “It’s been a very happy Valentine’s Day for investors today, and the momentum that we’ve seen through the week is very much intact at the moment.

“We got a good lead from Wall Street overnight. We’ve had some reasonable earnings numbers, but it hasn’t entirely been backed up by price action.”

Mr Le Brun was surprised that miner Rio Tinto had made only a tiny gain given good earnings results released by the company after the local share market had closed yesterday.

He said higher-than-expected inflation figures out of China today had not perturbed the local market much.

In the resources sector, Rio Tinto found 7 cents at $67.90 after posting a larger-than-expected full year profit and dividend late yesterday.

Global miner BHP Billiton jumped 39 cents to $37.71, and Fortescue rose 8 cents to $5.70.

Goldminer Newcrest was off 21 cents at $11.05 after suffering an 88 per cent fall in first half profit, but the company expects to hit its full year production and cashflow targets.

Uranium miner Paladin Energy was steady at 47.5 cents after a third consecutive year of weak uranium prices resulted in a half-year net loss of $255 million.

Among the major banks, Commonwealth Bank lifted 24 cents to $75.99, ANZ improved 35 cents to $31.34, Westpac strengthened 31 cents at $32.75, and National Australia Bank advanced 11 cents to $34.12.

Among other stocks, the world’s largest listed metals recycler, Sims Metal Management, surged 68 cents, or 6.79 per cent, to $10.70 after it reported a half year net profit of $9.3 million - a sharp turnaround from the $296 million first half loss recorded a year ago.

Australia’s largest car and truck retailer, Automotive Holdings Group, eased 5 cents to $3.65 after it managed a small rise in half year profit.

The broader All Ordinaries index was also up 48.2 points, or 0.91 per cent, at 5,366.9 points.

The March share price index futures contract had risen 45 points to 5,308 points, with 26,233 contracts traded.

National turnover was 1.65 billion securities worth $4.14 billion.