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Market has 6000pts in sight

The market has closed firmer. Picture: Lincoln Baker/The West Australian.

The ongoing recovery in iron ore and oil markets lifted the Australian sharemarket back to within striking distance of its seven-year high.

The S&P-ASX 200 index climbed 0.8 per cent in early trade but momentum waned as investors eyed the psychological 6000 point level and it closed up 49.4 points, or 0.83 per cent, at 5982.7 with gains across most sectors.

Spot iron ore jumped another 5.7 per cent to $US57.81 a tonne on Friday and Dalian iron ore futures were up 3 per cent today as the market reacted to the slowing supply overhang after BHP Billiton curbed its expansion plans.

The Shanghai composite index jumped another 2.5 per cent to a fresh six-year high after Chinese officials announced measures to curb price manipulation and insider trading.

In Tokyo the Nikkei index continued to struggle for momentum and was down 0.3 per cent at the close of the ASX.

The Australia dollar firmed US0.2¢ to US78.30¢ as the US dollar weakened against major currencies while government 10-year yields slipped 3.1 points to 2.502 per cent as US rate rise fears eased.

On Friday US core durable goods orders fell 0.5 per cent against expectations for a 0.3 per cent increase, prompting economists to downwardly revise their GDP forecasts, with the consensus down to one per cent, well short of the 2.5 per cent earlier estimates.

The Atlanta Federal Reserve’s “GDPNow” live data tracking indicator suggested US growth could be as low us 0.2 per cent.

“US data has generally been disappointing this year, sowing seeds of doubt among those expecting rate hikes this year,” Westpac strategist Imre Speizer said.

Brent crude oil climbed one per cent to a four month high of $US65.40 a barrel.

“Sustaining the recent oil price rally requires firmer demand and a tangible supply response,” Barclays strategists said.

“The cart is moving ahead of the horse, and we take a cautious view on further price appreciation over the near term.”

Mining giant BHP Billiton share prices rose to levels last seen in early March, with the materials stocks the strongest performers on a broader market edging closer to the 6000-point level.

This followed a 25 per cent surge in the price of iron ore since the start of April and another strong performance on Friday night for the steel making commodity, Bell Direct equities analyst Julia Lee said.

“BHP and Rio Tinto, investors are jumping back on board,” she said.

Among the big miners BHP shares jumped 52 cents, or 1.6 per cent, to $32.57.

Rio Tinto climbed $1.98, or 3.4 per cent, to $59.77 while iron ore player Fortescue lifted 36 cents, or 16.3 per cent, to $2.57.

PanAust added one cent to $1.75 after the gold and copper miner urged shareholders to reject a $1.1 billion takeover offer from Chinese-state owned company Guandong Rising Asset Management.

But it was another takeover prospect which excited investors.

Internet service provider iiNet was $1.14, or 13.2 per cent, higher at $9.80 after rival M2 Group put forward a takeover offer, setting the scene for a possible bidding war with TPG Telecom.

“It does look like the start of that bidding war,” Ms Lee said.

Commonwealth Bank lifted 62 cents to $92.72, National Australia Bank climbed 38 cents to $38.45, Westpac gained 43 cents to $38.85.

But ANZ fell 14 cents to $35.58. Bendigo Bank was up two cents at $12.12 after announcing it will issue around $200 million in new convertible preference shares.

Technology group Hills fell 14 cents, or 17.8 per cent, to 65 cents after warning that its full year profit could be up to 40 per cent lower than expected due to weakness across a number of sectors.

The broader All Ordinaries index was up 48 points, or 0.81 per cent, at 5954.8.

The June share price index futures contract was 36 points higher at 5974, with 26,073 contracts traded.

National turnover was 1.9 billion securities worth $5.2 billion.