SYDNEY (XFN-ASIA) – Share prices ended higher with investor sentiment buoyed by Wall Street’s gains on Friday after better-than-expected US existing home sales in February, dealers said.

Local stocks were also boosted by M&A; activity including leading retailer Coles which detailed plans for a possible 20 bln aud sale of the group when it reported a 3.5 pct rise in interim profit to 501.3 mln aud. Coles shares advanced 0.15 aud to a record close of 16.15 aud.

The S&P;/ASX 200 closed up 38.4 points or 0.65 pct at 5,990.7 after trading between 5,992.0 and 5,957.9.

The All Ordinaries index climbed 37.4 points to close at 5,970.5.

Dealers said global miner BHP Billiton advanced on announcing the completion of a 2.8 bln usd off-market buyback of 141.1 mln shares.

BHP Billiton shares jumped 0.84 or 2.88 pct to finish at 30.04 while Rio Tinto advanced 1.55 or 2.02 pct to 78.40.

Telecom Corp of New Zealand rose after selling its Yellow Pages Group directories business for 2.24 bln nzd to private equity firms CCMP Capital Asia and Teachers’ Private Capital of Canada.

Telecom Corp of NZ shares ended up 0.10 or 2.43 pct at 4.22.

The world’s largest supplier of pallets, Brambles, gained on speculation it is looking at purchasing US-based pallet business IFCO for 1 bln usd. Brambles shares were up 0.08 to finish at 13.63.

However, on-line broking firm E*Trade Australia dropped after rejecting ANZ Bank’s 4.05 aud a share offer. E*Trade shares retreated 0.14 or 3.52 pct to close at 4.17.

A total of 1.61 bln shares worth 5.72 bln aud were traded, with rises outnumbering falls 684 to 549 and 337 stocks unchanged.

The S&P;/ASX200 June futures contract was up 49.0 points at 6,045.0.

The 10-year bond yield rose 0.010 to 5.845 pct while 90-day bills fell 0.01 to 6.535 pct.

AMP Capital Investors head of investment strategy Shane Oliver said there remains a risk of market volatility even though share prices on the local market have rebounded to less than 2 pct off record highs reached in February.

”While shares have retraced much of the falls experienced during the recent correction, there is still a risk of turbulence ahead in the short term,’ Oliver said.

‘Uncertainty over US and global growth may linger for a while yet, the crisis in the US mortgage market has further to run (and) investor sentiment has yet to reach bearish extremes that normally signal market bottoms.’

Oliver said while the very short term outlook may be a little uncertain, his firm still views the four year old bull market in shares as being alive and well.

Meanwhile, CommSec equities economist Martin Arnold said the Reserve Bank of Australia provided a positive outlook for the domestic and global economies in its semi-annual financial stability statement, but the central bank remains cautious about the future knowing that the good times cannot last forever.

‘While profitability and balance sheets are strong, competition has forced margins lower. And banks and insurance companies, in particular, need to adequately price the risk of an economic slowdown,’ Arnold said.

The economist noted the RBA gave no hints for likely interest rate policy ahead and CommSec expects the central bank to remain on the interest rate sidelines for the foreseeable future.

National Australia Bank gained 0.25 to close at 40.85, Commonwealth Bank rose 0.19 to 50.46, Westpac added 0.10 to 26.25 but ANZ eased 0.01 to 29.54.

St George fell 0.11 to 34.60, Bank of Queensland slipped 0.04 to 17.00 and Bendigo Bank dropped 0.18 to 17.12.

Macquarie Bank advanced 0.26 to 82.21 but Babcock & Brown lost 0.17 to 26.86.

QBE climbed 0.50 to 32.45, AMP was up 0.08 at 10.45, IAG added 0.03 to 5.98 and Suncorp gained 0.07 to 20.77.

Telstra added 0.01 to 4.49, its T3 receipts gained 0.02 to 3.04 while SingTel shed 0.03 to 2.60.

News Corp lost 0.27 to 30.48 and its non-voting stock dropped 0.29 to 28.61.

Alumina was up 0.07 at 7.32 while Zinifex climbed 0.17 to 16.22.

Newcrest rose 0.25 to 23.81, Lihir Gold added 0.01 to 3.26 and Oxiana also gained 0.01 to 2.81.

Woodside jumped 1.27 to 38.23, Oil Search was up 0.03 at 3.62 but Santos fell 0.09 to 9.93.

BlueScope climbed 0.11 to 10.06 while OneSteel rose 0.01 to 5.09.

James Hardie advanced 0.08 to 8.63 and Rinker gained 0.06 to 18.18.

Woolworths was up 0.06 at 27.21, David Jones rose 0.12 to 4.80 but Harvey Norman shed 0.06 to 4.72.

Westfield dropped 0.27 to 20.96, GPT eased 0.02 to 4.88 and Stockland fell 0.09 to 8.35.

Qantas added 0.03 to 5.09, Virgin Blue gained 0.01 to 2.67 and Toll Holdings climbed 0.32 to 20.47.

(1 usd = 1.24 aud)

paul.daniel@xfn.com