INVESTORS shrugged off their nervousness and took heart from brighter news yesterday to post the share market's strongest day since late November.
Easing fears about the possibility of a Greek debt tragedy in Europe, stronger corporate results and a positive vibe about banks and resources helped the benchmark ASX 200 index close up 100.1 points, or 2.2 per cent, at 4667.9 points.
All the big banks gained, with ANZ climbing 4.4 per cent. Rio Tinto, too, took a fly, finishing up 3.3 per cent.
Resource stocks, particularly, saw the benefit of "subsiding" concerns about European debt, said Commsec economist Savanth Sebastian.
Overnight Greek finance minister George Papaconstantinou insisted the Mediterranean state was ahead of its deficit reduction targets and would not require a bailout from the European Union.
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While the announcement was greeted with scepticism by European bond markets, Mr Savanth said the greenback fell, boosting commodity prices.
"And there was a spike in the euro when people realised the European debt story may not be as bad as first thought," he said.
"That set us up for a good day, and we also had some good earnings results."
The Australian dollar enjoyed its strongest outing since January 25, jumping back above US90.
Senior currency analyst with financial markets research group Forecast, Lee Wai Tuck, said the Aussie benefited from the lift in risk appetite on markets.
Adding to the positive mood was new data from Westpac and the Melbourne Institute predicting Australia's economic growth will climb back to levels last seen at the peak of the resources boom.
The leading index of economic activity, which indicates the likely pace of activity three to nine months into the future, recorded annual growth of 6.2 per cent in December.
Westpac senior economist Matthew Hassan said the annualised growth rate continued to recover after bottoming at minus 6.9 per cent last May.
"This large swing is not only the fastest reversal since the economy bounced out of recession in the mid-1970s but also puts the growth outlook back on a par with that seen in 2007 at the height of Australia's resources boom," Mr Hassan said.
Westpac shares rose another 2.95 per cent yesterday after the 6.1 per cent on Tuesday after it unveiled a bumper cash profit of $1.6 billion for the December quarter.
The lower-than-expected impairments revealed by Westpac have raised expectations NAB and ANZ also will have lower bad debt provisions when they reveal their quarterly results.
Shares in NAB, which will issue its December quarter results tomorrow, were up 3.6 per cent yesterday while CBA shares rose 3.5 per cent.
Among companies unveiling bumper results yesterday were pharmaceutical giant CSL and financial services group AXA. Markets across Asia performed well too.
Mr Sebastian said the Australian market was picking up on the "cautious but optimistic" tone of chief executives.
He said a "deluge" of US economic data due overnight should set the tone for trading today.
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