Aussie stocks up 2.7 percent, led by banks

Australian shares rose 2.7 percent on Wednesday, ending three straight sessions of losses, as investors welcomed falling oil prices and the prospect of easing interest rates in Australia.
Oil prices were at fresh three-month lows below $119 a barrel <CLc1> in Asian trading after dropping overnight as global investors unwound positions in commodity markets due to concerns a slowing global economy would reduce demand.

Banks lead the gains on hopes the Reserve Bank of Australia will cut interest rates, possibly as early as next month, with the covering of short positions also boosting prices.

'The banks are on fire, mostly likely on short covering,' said Ric Klusman, head of institutional trading at Aequs Securities.

He said index leader BHP Billiton Ltd <BHP.AX>, the world's top miner and Australia's largest oil producer, had also made gains despite the fall in oil prices and weaker base metal prices.

'BHP is an index play -- those people buying the futures also have to buy the basket of the top 200,' said Klusman.

He said the rally may be short-lived as U.S. futures were pointing down.

'It could fade pretty quickly this afternoon,' said Klusman.

The benchmark S&P/ASX 200 index <.AXJO> was up 130.8 points at 4,951.5 by 0200 GMT, after falling a total of 3.2 percent in the previous three sessions.

Stock index futures <YAPcm1> were up 2.1 percent or 99 points at 4,926.

New Zealand's benchmark NZX-50 index <.NZ50> was up 1.9 percent, or 62.4 points, at 3,358.08. The most heavily weighted stock, Telecom Corp of New Zealand <TEL.NZ>, was up 0.5 percent at NZ$3.69.

STOCKS ON THE MOVE

* Explosives maker Orica Ltd <Ori.AX>, which is spinning off its consumer products businesses into a separate company, was up 3.2 percent after Macquarie Equities upgraded its recommendation on the stock to outperform from neutral.

Macquarie said Orica provides low-risk exposure to stronger mining production as infrastructure bottlenecks in Australia are removed. Orica supplies explosives to the mining industry.

* Banks were higher after Australia's central bank on Tuesday signalled there was scope for an easing in monetary policy. National Australia Bank Ltd (Berlin: NAL.BE - news) <NAB.AX> rose 3.8 percent to A$25.69 and Commonwealth Bank of Australia Ltd <CBA.AX> added 5.1 percent to A$43.35.

Australia and New Zealand Banking Group Ltd <ANZ.AX> gained 4.6 percent to A$17.79 while Westpac Banking Corp (Frankfurt: 854242 - news) <WBC.AX> rose 4.4 percent to A$22.81.

* BHP Billiton (LSE: BLT.L - news) <BHP.AX) was up 2.4 percent at A$36.68, tracking gains in the broader market and its takeover target Rio Tinto (LSE: RIO.L - news) <Rio.AX> gained 2.8 percent to A$113.45.

* Transport infrastructure group Asciano Ltd <AIO.AX>, under an unsolicited private equity takeover offer pitched at A$4.40 per share, was up 1.4 percent at A$5.10 despite reporting a larger-than-expected loss of A$182.1 million ($167 million). The company's Chief Executive Mark Rowsthorn said at a briefing that it had received other offers for its assets.

($1=A$1.09)