Australian shares recouped almost all their early losses on Wednesday, outperforming rival markets in Asia as a fall in the Australian dollar and signals of a coming interest rate cut raised hopes of higher company profits. Reserve Bank Governor Glenn Stevens spoke on Tuesday of "considering a further step to ease monetary policy" once inflation figures are published, a reference to lower rates.
That expectation was reinforced by data released on Wednesday showing Australia's February trade left it with a deficit of A$480 million. Forecasts had centred on a surplus of A$1.0 billion. "The market seems to be getting more comfortable with the fact that while we didn't get a rate cut yesterday, there's one coming at the next meeting and on that basis they are looking for opportunities to increase their equities exposure," said Winston Sammut, investment director at Maxim Asset Management.
The benchmark S&P/ASX 200 index ended just 3 points down at 4,333.9, according to the latest data, off a session low of 4,316.4. It rose 0.2 percent on Tuesday, and is up from March lows of below 4,150. New Zealand's benchmark NZX 50 index rose 0.2 percent to 3,480.4. Underpinning the Australian move was a 3.4 percent rise in QBE Insurance Group after it said business was off to a "superb" start in 2012, with premiums set to rise by more than 7 percent.
Weaker metal prices dragged resources giant BHP Billiton down 1.3 percent to A$34.74, and gold miner Newcrest Mining lost 2.4 percent to A$28.50, its lowest close since August 2009. The Australian dollar fell to a fresh 11-week low against the greenback.
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