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The market is set to gain ground at the open.
The West Australian The market is set to gain ground at the open.

A rotation to miners ahead of Rio Tinto's profit report this afternoon drove the Australian sharemarket to a post-GFC high.

The S&P/ASX 200 opened in the red but rallied steadily throughout the day before a late selloff that left it 33.2 points, or 0.66 per cent, up at 5036.9 points, its highest close since September 2008, with the major banks also extending gains.

However, the rally remained narrowly focussed on large cap stocks as the Small ordinaries index lagged with a 0.2 per cent gain amid warnings from Treasury officials that the economy was set for sub-par growth over the next two years.

The Australian dollar was steady at $US1.0350 as markets priced in a 39 per cent chance of a March rate cut.

In Tokyo the Nikkei index was up per cent as an unexpected contraction of 0.1 per cent in the December-quarter reinforced the view that the new government's push for ultra-easy monetary policy was necessary.

While in Hong Kong the Hang Seng index was up 0.8 per cent.

Overnight Wall Street finished marginally higher after January retail sales growth, excluding autos, of 0.2 per cent beat forecasts, but soft profit reports from McDonald's, Coca-Cola and Merck tempered sentiment.

Global sentiment was also boosted by a bounce in European industrial production growth to 0.7 per cent in December, although the data had little impact on commodity markets.

Copper eased 0.1 per cent to $US8226 a tonne and gold slipped $US6 to $US1645 an ounce, while Brent crude oil was steady at $US118 a barrel, despite an increase in US crude oil reserves to a 20-year high.

More to come…