EARLY inertia on the share market was swept aside after the central bank's interest rate decision, with banks and financials pushing the market to its first significant rise in two weeks.
The local bourse opened about 0.7 per cent lower on a weak European lead, and was marginally in negative territory by noon before strengthening into the close.
At 4.15pm (AEST), the benchmark S&P/ASX200 index was up 54 points, or 1.28 per cent, at 4276.1 points, while the broader All Ordinaries index was 49.1 points, or 1.16 per cent, firmer at 4299.7.
On the Sydney Futures Exchange, the September futures contract was 58 points higher at 4266 points, on turnover of 24,380 contracts.
Bell Potter Securities Ltd senior client adviser Stuart Smith said the local market was "ridiculously cheap'' and had touched a nadir this morning when the S&P/ASX 200 touched 4,182 points.
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"Valuations are compelling at a time when risk aversion is lifting and consensus of market behaviour is losing momentum,'' he said.
"We are going down by the lift hopefully reaching the basement, and then up by the stairs.''
"This is the time for the young bull.''
Banks reversed course during the day, finishing about 2.45 per cent higher as word spread of short covering large positions held against some banking stocks, Mr Smith said.
The Reserve Bank's decision to keep the official cash rate on hold at 4.5 per cent also helped the sector, he said.
NAB fell 1.01 per cent in opening trade, but led the sector higher by the close, finishing up 68 cents, or 2.99 per cent at $23.40.
Westpac gained 62 cents, or 2.98 per cent, to $21.41, ANZ Banking Group added 62 cents, or 2.97 per cent, at $21.51, and Commonwealth Bank advanced $1.10, or 2.3 per cent, to $48.89.
Mr Smith said the market could tolerate more risk given the largest trade surplus in 14 months, and the short positions held in bank stocks.
"BHP, Xstrata and Rio virtually announced in concert re-starting of shelved projects, all to the good,'' he added.
BHP Billiton firmed 17 cents to $37.15, while Rio Tinto backtracked 15 cents to $65.10.
Oil stocks strengthened during the day, with Santos reversing its downward momentum to finish up 16 cents, or 1.29 per cent, at $12.56.
Oil Search rose 17 cents, or 3.1 per cent, to $5.66 and Woodside Petroleum added 77 cents, or 1.88 per cent, to $41.65.
By 4.27pm AEST, the spot price of gold in Sydney was $US1,208.10 per fine ounce, down $US5.08 from yesterday's closing price of $US1213.18.
Consumer discretionary stocks also erased the morning's losses.
Department store owner David Jones added five cents, or 1.14 per cent, to $4.42, while its rival Myer firmed two cents to $3.26 and JB Hi-Fi gained 14 cents to $19.00.
Investors piled into Telstra, sending the stock up eight cents, or 2.57 per, cent to $3.19 on turnover of more than 46.5 million shares.
Stocks slide on weak jobs reportStocks open higher on positive news
