The Australian share market has closed slightly higher as investors bide their time ahead of developments in the US and Europe.
Following the low volume gain on Wall Street last night the S&P/ASX 200 index rose 12.9 points, or 0.23 per cent, to 5492.8 as investors rotated away from miners to the major banks.
Iron ore futures dropped one per cent today but the Shanghai composite index was up 0.2 per cent on speculation property development curbs would be lifted to support growth.
In Tokyo the Nikkei index was up 0.9 per cent.
The Australian dollar slipped US0.3¢ to US92.40¢ as the US dollar edged higher higher against most currencies following the release of weaker eurozone PMI data yesterday.
The PMI data revealed France was diverging from the growth trend of powerhouse Germany as it dropped back into the contraction zone.
Australian government 10-years yields jumped another 4.1 points to 3.789 per cent as global safe have demand abated.
Although most markets had recovered lost ground from the surprise spike higher in peripheral eurozone bond yields that unsettled markets last week, Westpac market strategist Graeme Jarvis noted the yields of Spain, Italy, Portugal and Greece continued to send distress signals.
Mr Jarvis said the markets that caused the “global risk bleed continued to spurt blood” this week.
“Markets around the globe believe we just took a nick to a vein,” he said. “I think that until yields in Portugal, Spain, Greece and Italy break back lower we have actually nicked our femoral artery.”
Last night the US S&P 500 rose 0.2 per cent despite a jump and in weekly jobless claims and existing house sales data that would have rung alarm bells in the US Federal Reserve after showing little evidence of spring bounce-back.
San Francisco Fed President John Williams said the US economy was clearly on the mend but he had been caught off guard by weakness in the housing sector.
Gold was steady at $US1294 an ounce and copper rose 0.6 per cent to $US6875 a tonne.
IG market analyst Evan Lucas said investors were waiting for the release of US new home sales data and European elections on Friday night and local capital expenditure figures next week.
“It is a positive build up to what was a really horrible start to the week,” Mr Lucas said.
The local market experienced strong morning gains due to encouraging manufacturing data out of the US and Europe, better-than-expected manufacturing figures out of China yesterday, and flatter iron ore prices.
“We don’t really know how the US and Europe are going to end the week,” Mr Lucas said.
Traders were also looking ahead to private capital expenditure figures next Thursday.
Among the major banks, Westpac had lifted 33 cents to $34.19, ANZ gained 19 cents to $33.60, National Australia Bank improved three cents to $33.57, and Commonwealth Bank picked up 66 cents at $81.31.
Resources stocks were under pressure, with mining giant BHP Billiton flat at $37.65, Rio Tinto was down 42 cents at $60.54, and Fortescue Metals was down eight cents at $4.51. Telstra added two cents to $5.38.
On Wall Street overnight, the Dow Jones Industrial Average added 10.02 points, or 0.06 per cent, to 16,543.08 points.
The broader All Ordinaries index was up 12.2 points, or 0.22 per cent, at 5470.3.
The June share price index futures contract was 16 points higher at 5504, with 14,946 contracts traded.
National turnover was 1.6 billion securities worth $3.8 billion.