Australian shares close up 1.7 percent

Australian shares closed up 1.7 percent on Tuesday after the nation's central bank announced a big interest rate cut that reversed earlier declines sparked by the global financial crisis. The benchmark S&P/ASX200 jumped 78.3 points to close at 4618.7, while the broader All Ordinaries was up 53.2 points at 4597.9 after the Reserve Bank of Australia slashed the official rate by one percentage point to 6.0 percent.
The move - the biggest cut in rates since May 1992 - surprised the market that had expected a cut of only up to 0.50 percentage points. News of the cut sparked a spectacular turnaround in the market that had opened more than three percent lower following a thrashing on Wall Street overnight on the back of global financial turmoil sparked by a credit crunch. "The simple catalyst for the turnaround in the market was the Reserve Bank decision," Macquarie Equities client adviser David Halliday told the Australian Associated Press.
"The market is hopeful that with some monetary policy easing and some fiscal stimulus by the government here and potentially a co-ordinated approach by similar agencies around the world might be enough to turn this dire situation around," he added. Market turnover stood at 1.46 billion shares, valued at 4.94 billion dollars (3.56 billion US), with 325 stocks moving up, 832 stocks falling and 265 unchanged.
Australia's big banks and mining companies saw their share prices rise, with ANZ adding 0.10 dollars or 0.55 percent to 18.15 dollars, National Australia Bank gaining 1.7 percent or 0.45 dollars to 26.00 and Westpac rising 3.4 percent or 0.77 dollars to 23.27. Commonwealth Bank rose 1.15 dollars, or 2.61 percent, to 45.15 dollars after launching exclusive negotiations with troubled British bank HBOS to buy its Australian retail banking arm BankWest.
The big miners were also stronger, with global giant BHP Billiton gaining 1.91 dollars, or 6.41 percent, to 31.70, while its rival and take-over target Rio Tinto added 3.29 dollars, or 3.89 percent, to 87.77. But energy stocks were weaker after the oil price fell, with Woodside Petroleum losing 1.95 dollars to 47.05 and Santos shedding 0.45 dollars to 16.75.