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ASX closes up on fiscal cliff negotiations
ASX closes up on fiscal cliff negotiations

Hopes for compromise on US “fiscal cliff” negotiations supported most Asian markets, but caution remained in the air as the Australian sharemarket finished a roller-coaster session in the black.

The S&P/ASX 200 opened 0.6 per cent up, fell back to little changed and closed 24.5 points, or 0.57 per cent, up at 4361.4 points as Chinese stocks dropped back to near-four year lows in the morning session.

The global relief rally followed a late bounce in the US on Friday following comments by Republican leader Jon Boehner that talks with President Barack Obama had been “constructive”.

Speaking in Bangkok yesterday, President Obama said: “I am confident we can get our fiscal situation dealt with.”

National Australia Bank global head of currency strategy Ray Attrill said focus this week would remain on the discussions, specifically surrounding capital gains for wealthier Americans.

“Any firm indications that the days of 15 per cent capital gains tax are numbered, has the potential to re-ignite an equity sell-off and support the US dollar,” he said.

The Australian dollar bounced 0.4¢ to $US1.0370 and reached a six-month high against the yen ahead of a Bank of Japan monetary policy meeting.

The Nikkei index climbed another 1.7 per cent as traders ramped up bets that monetary easing would step up next month when an expected change of government would put pressure on the BOJ. Japan’s opposition LDP party has suggested the BOJ should not remain independent of government.

The Shanghai composite index was off 0.3 per cent at the close of the ASX as the bottoming of house prices dampened monetary easing and infrastructure stimulus hopes.

Global trading is set to slow this week ahead of the US Thanksgiving holiday on Thursday, with attention also firmly on the “Black Friday” holiday spending for an indication on the state of US consumer finances.

Gold climbed $US8 to $US1722 an ounce, copper rose one per cent to $US7685 a tonne and on Friday spot iron ore edged up US40¢ to $US122.80 a tonne.

The broader All Ordinaries index was up 22.5 points, or 0.51 per cent, at 4,382.6.

On the ASX 24, the December share price index futures contract was 27 points higher at 4375, with 21,272 contracts traded.

RBS Morgans private client adviser Bill Bishop said local investors were feeling optimistic on Monday after talks between the US Republican and Democrats to avoid the “fiscal cliff” appeared to be fruitful. “Americans are feeling a little bit better about the fiscal cliff,” he said.

The “fiscal cliff” refers to a series of planned tax hikes and spending cuts that economists fear could send the US into recession if a compromise is not reached between Democrats and Republicans.

The Dow Jones Industrial Average finished up 45.93 points (0.37 per cent) at 12,588.31.

Shares in drilling company Boart Longyear jumped 10.5 cents, or 8.11 per cent, to $1.40 despite it announcing an earnings downgrade, with investors apparently more impressed with the $US70 million ($A68.08 million) cost cutting exercise it has launched.

Troubled retailer Billabong also had its shares surge 7.5 cents, or 10.14 per cent, to 81.5 cents after its head of US business Paul Naude said he was considering taking control of the company.

The mining giants closed mixed.

BHP Billiton soared 28 cents to $33.21, but Rio Tinto dived 19 cents to $56.71 and Fortescue fell five cents to $3.85.

The four major banks also had a mixed day. National Australia Bank was up 16 cents to $23.38.

However ANZ dropped one cent to $23.65, Westpac fell two cents to $24.40 and Commonwealth Bank dived 13 cents to $58.15.

National turnover was 1.326 billion shares worth $3.025 billion, with 494 shares up, 418 down and 361 unchanged.