Australian stocks rose 0.7 percent on Monday, with investors encouraged by an emergency aid plan for Greece, a brighter mood on Wall Street, booming iron ore demand and mining takeovers activity at home. Macarthur Coal, focus of a bidding war, climbed as much as 10 percent to A$17.17, its highest level since July 2008, as investors bet that coal giant Xstrata would trump two rival offers the coal producer has rejected.
"Take-over talk and speculation is playing into the minds of investors. The M&A activity build-up is a sign of confidence returning to companies, which encourages investors," said Juliette Saly, market analyst at Commonwealth Securities. Iron ore miners were among the market's top gainers on Monday, with Atlas Iron and Murchison Metals both up around 7 percent after bigger rival Fortescue Metals' founder Andrew Forrest said the company had fended off serious suitors.
The benchmark S&P/ASX 200 index gained 36.2 points to close at a fresh 18-month high of 4,984.3, according to the latest data. "The rest of week looks good. Fund managers had shored up cash levels unsure of the length of the rally. Now money is finding its way back into the market," said Leigh Gardner, head of distribution at RBS. Top miner BHP Billiton and rival Rio Tinto both rose more than 1 percent. Among the big banks, Australia and New Zealand Banking Group posted the biggest gain, rising 0.8 percent.
Beleaguered drug manufacturer and pharmacy group Sigma Pharmaceuticals eapt nearly 11 percent to A$0.52 on eight times its 90-day average daily volume on speculation that private equity groups Ironbridge and Archer Capital might be lining up a take-over offer, two dealers said. A private equity source played down the talk, saying it would make sense to look at certain assets that Sigma might sell off to pay down debt, but not the whole company.
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