By Robb M. Stewart
MELBOURNE, Australia--Reassurance from Federal Reserve
Chairwoman Janet Yellen that U.S. interest rates are on track to
rise weighed on the Australian dollar Monday and helped lift the
local equities market.
Mining stocks responded positively to a weaker currency and a
jump in the price of iron ore, Australia's biggest mineral export,
while bank shares recovered from further weakness on Friday.
The S&P/ASX 200 closed up 1% at 5721.5, partially retracing
a 1.2% fall over past week.
The U.S. dollar was buoyed by Ms. Yellen's remarks Friday, which
reiterated the central bank's intention to raise short-term rates
this year, though there wasn't new clarity for investors. The
comments came after the release of a stronger-than-expected reading
on U.S. consumer inflation in April.
Australia's export-sensitive sectors had been struggling of
late, as investors worried about a resurgence in the Australian
dollar.
Among Australian mining shares, BHP Billiton Ltd. (BHP.AU)
climbed 0.8%, Rio Tinto Ltd. (RIO.AU) gained 1.6% and iron-ore
producer Fortescue Metals Group Ltd. (FMG.AU) rose 2.8% after the
price of the steelmaking ingredient climbed 4% on Friday to
US$59.90, according to the Steel Index.
Bank shares were up solidly for the day, with Commonwealth Bank
of Australia (CBA.AU) rising 1.1%, Westpac Banking Corp. (WBC.AU)
ahead 1.2% and Australia & New Zealand Banking Group Ltd.
(ANZ.AU) and National Australia Bank Ltd. (NAB.AU) up 0.8% and
0.9%, respectively.
The four big banks, which have a large weighting in the ASX 200,
had fallen sharply this month, after disappointing earnings reports
and amid concerns regulators would order lenders to hold more
capital against the risk of future economic crises.
Elsewhere, merger-and-acquisition activity led to strong gains
in select stocks.
Sirius Resources NL (SIR.AU) rallied 20% after mining company
Independence Group NL (IGO.AU) confirmed a cash-and-shares takeover
bid, while shares in services company Skilled Group Ltd. (SKE.AU)
jumped 12% after it said it had resumed merger discussions with
Programmed Maintenance Services Ltd. (PRG.AU).
Write to Robb M. Stewart at robb.stewart@wsj.com
