Market dispels US stimulus halt

Another grab for high yielding stocks helped the Australian sharemarket shrug off a disconcerting shift last night in the US Federal Reserve's monetary statement and confirmation of the end of quantitative easing.

US stocks finished a choppy session 0.1 per cent down but the S&P/ASX 200 index climbed 28.5 points, or 0.52 per cent, to 5476.2 after the Fed reaffirmed that rates would stay low for a considerable period but added a "hawkish twist".

The US dollar rallied against most currencies and knocked gold lower after the Fed changed its language surrounding unemployment by noting there was "underutilisation of labor resources', having dropped the word "significant from the statement used last month.

"The focus now turns to how quickly the (Fed) will move to normalise interest rates," Westpac economist Elliot Clarke said. "On the activity front, three components are key: consumption; the housing market; and business investment."

"Despite the more hawkish language, what we have seen this week from the (Fed) is not an abrupt policy shift in their focus, but rather a continuation along a dynamic path to what they hope will be a return to normal," he said.

The Fed news provided relief for domestic exporters after the Australian dollar fell US1¢ to US87.70¢. Government 10-year yields rose 2.1 points to 3.316 per cent as markets shifted marginally towards pricing in higher US rates sometime next year.

The domestic growth outlook was dented by a 3.9 per cent fall in export prices in the September-quarter.

The Shanghai composite index was up 0.1 per cent at the close of the ASX as weak earnings reports weighed on sentiment and Industrial & Commercial Bank of China reported the biggest jump in bad loans since 2006.

In Tokyo the Nikkei index climbed 0.7 per cent after the yen fell against the US dollar.

Spot iron ore slipped 0.2 per cent to $US79.10 a tonne yesterday and Dalian iron ore futures were off 0.2 per cent today.

Copper dropped 0.4 per cent to $US6770 a tonne and gold fell $US15 to $US1213 an ounce.

The US Federal Reserve's decision to end its quantitative easing stimulus measure was not well received on Wall Street, but the opposite occurred on the local market, City Index senior market analyst Kara Ordway said.

"That Fed meeting was a fairly kind of feel-good signal to the market despite US equities being largely flat," she said.

"Really, it's just high-yielding stocks once again that are benefiting."

NAB's annual cash profit fell by nearly 10 per cent to $5.18 billion, as it had previously forecast, and the bank confirmed plans to exit its troubled UK operations.

NAB shares gained 26 cents to $34.64, Commonwealth Bank added 59 cents to $80.17, Westpac lifted 29 cents to $34.46 and ANZ was 33 cents higher at $33.26.

ANZ and Westpac will publish their financial results in coming days, and the market expects better numbers from them, Ms Ordway said.

Insurers also drove the market higher, after Insurance Australia Group said it was on track to meet its forecasts after a strong first quarter of the financial year.

IAG added 16 cents to $6.45, AMP gained nine cents to $5.74, Suncorp lifted 12 cents to $14.44 and QBE was 23 cents higher at $11.53.

Mining stocks fell after terms of trade figures for the September quarter showed a sharper decline in export prices, stirring more concerns about China, Ms Ordway said.

BHP Billiton dropped 23 cents to $33.55, Rio Tinto lost 35 cents to $59.30 and Fortescue Metals was one cent weaker at $3.44.Coles owner Wesfarmers gained 57 cents to $43.92 after forecasting continuing sales growth in most of its retail businesses, while Woolworths was 22 cents higher at $35.72.

Casino operator Echo Entertainment added 22 cents to $3.76 after forecasting a rise in half year earnings of up to 31 per cent.

The broader All Ordinaries index was up 26 points, or 0.48 per cent, at 5,457.1 points.

The December share price index futures contract was up 27 points at 5,456 points, with 19,877 contracts traded.

National turnover was 2.1 billion securities worth $5.2 billion.