Australian shares rebounded 1.1 percent on Thursday, as Wall Street had modest gains overnight and higher metals prices underpinned mining stocks, but political turmoil in Portugal and concerns on China growth pared early gains. The S&P/ASX 200 index climbed 50.6 points to finish the session at 4,794.7. The benchmark fell 1.9 percent on Wednesday. New Zealand's benchmark NZX 50 index rose 0.2 percent or 8.2 points to finish at 4,459.
Financials buoyed the market. Westpac Banking Corp rose 0.5 percent and Australia and New Zealand Banking Group rallied 1 percent. Miners were also stronger. Rio Tinto Ltd added 0.8 percent while Fortescue Metals Group soared 3.9 percent. BHP Billiton Ltd edged 0.1 percent higher.
The local bourse has had a volatile week with broad swings in both directions, plunging to a low of 4,702.7 points on Monday before rallying as high as 4,834 on Tuesday after the Reserve Bank said there might be room for further cuts in its cash rate. The benchmark fell 1.9 percent on Wednesday. "Throw in concerns about US stimulus, throw in concerns about China's growth and you've got plenty of reasons for people to be active in the market," said Michael McCarthy, chief market strategist at CMC Markets.
"Investors are tending to go with the daily momentum, I expect we'll see it settle over the next week or so." Meanwhile, defensives rallied. Consumer retail staple Wesfarmers Ltd rose 0.8 percent while blood products maker CSL Ltd soared 2.7 percent. Telecommunications provider Telstra Corporation Ltd climbed 1 percent.
The index hit a year-high of 5,249.6 on May 15 but has since been dragged down by recent data indicating slowing economic growth in China and concerns about the US Federal Reserve's plans to curtail its stimulus. Also unsettling investors, the Portugese government is struggling to survive following the resignations of its foreign minister and finance minister this week, which could deprive if of a majority in Parliament. Portugal's stock market dropped more than 5 percent, suffering its biggest fall in around three years.
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