Australian stocks have opened higher, helped by short-covering and solid domestic corporate earnings as investors recovered after a rocky week shaken by worries of a fresh global recession.
In mid-morning trade, the benchmark S&P/ASX200 index was up 76 points, or 1.8 per cent, at 4248.6, while the broader All Ordinaries index gained 75.9 points, or 1.8 per cent to 4313.8.
Leading the gains were the energy and materials sectors, up 2.9 per cent and 2.5 per cent respectively, while financials rose 1.3 per cent. Gold stocks bucked the trend, dropping 0.6 per cent.
The dollar rose nearly a full US cent against the greenback, hitting $US1.0426, as investors return to risikier assets.
"We are on the doorstep of the reporting season. It is tough, but they are meeting their numbers and that is serving to underpin the valuation on the market," said Richard Morrow, director at E.L. & C. Baillieu Stockbroking.
Market sentiment was soothed after Wall Street and European markets recovered as panic over debt crises and a potential global recession subsided, at least for now.
Australian Foundation Investment Company chairman Bruce Teele said he expected markets will remain volatile as economic and financial problems in Europe and the United States continue.
But he said AFIC, with a portfolio of $4 billion of large and mid-cap stocks, was using the slide in share prices to buy blue-chip stocks.
"We have been selectively buying shares in high-quality companies at very attractive prices, taking a long-term view," Mr Teele said in a letter to shareholders in the country's largest listed investment firm.
If shares dipped to new lows, Mr Teele said AFIC would resume "careful, modest" buying.
Among companies reporting results this morning, Newcrest said its underlying full-year profit rose 36 per cent as it absorbed Lihir Gold and benefitted from rising world gold prices. Newcrest shares edged higher in morning trade, adding as much as 47 cents, or 1.2 per cent, to $41.20.
Australia's biggest construction firm, Leighton Holdings, posted a loss as predicted and forecast a return to profit of $600 million or more this financial year. Leighton shares rose at the opening, adding as much as 75 cents, or 3.8 per cent, to $20.60.
Ansell, meanwhile, reported a small profit gain but said earnings should increase 12 per cent this year. Ansell shares gained as much as 84 cents, or 6.4 per cent, to $13.98 in early trading.
UGL also posted a profit expansion of about 10 per cent, and expects more growth this business year. UGL shares rose as much as 25 cents, or 2 per cent in early trading, to $12.75.
Contract miner Macmahon Holdings jumped 6.9 per cent to 54 cents after it confirmed it was in talks along with Germany's BBM Operta to run Mongolia's major East Tsankhi coal project, part of the massive Tavan Tolgoi coal field.
AAP, Reuters, with BusinessDay