Australian Stocks Rise on Commodity Prices; Qantas Advances

Dec. 31 (Bloomberg) -- Australian stocks climbed as metal and oil prices rose amid optimism the global economic recovery is strengthening.

BHP Billiton Ltd., the world’s largest mining company and Australia’s biggest oil producer, gained 1 percent as copper extended yesterday’s rally in New York, while crude rose for a seventh day. Fortescue Metals Group Ltd., Australia’s No. 3 iron-ore producer, rallied 2.5 percent. Qantas Airways Ltd. advanced 2.4 percent on signs global air travel is picking up.

Australia’s S&P/ASX 200 Index rose 0.8 percent to 4,870.70 as of 1:03 p.m. in Sydney. The gauge, which tumbled 41 percent last year as the global recession deepened, is headed for a 31 percent gain this year as government stimulus measures help shore up economies. New Zealand’s NZX 50 Index advanced 0.3 percent and is set for a 19 percent annual gain.

“Investors are generally a lot more relaxed right now,” said Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney. “The sixty-four-million dollar question is: what happens next year where we could have a much stronger economic backdrop but tighter liquidity conditions? Markets may well end up consolidating gains in 2010 rather than making another big move upwards.”

Economic Recovery

Futures on the Standard & Poor’s 500 Index were little changed. The gauge added less than 0.1 percent yesterday as a report from the Institute for Supply Management-Chicago Inc. showed U.S. companies expanded in December at the fastest pace in almost four years. Most U.S. stocks fell amid speculation the Federal Reserve will withdraw stimulus measures.

BHP Billiton climbed 1 percent to A$43.12. Santos Ltd., Australia’s third-largest oil and gas producer, added 0.5 percent to A$14.07. Fortescue rallied 2.5 percent to A$4.46, after the cash price for iron ore delivered to China, the world’s biggest buyer, rose the most in more than five months to its highest this year, according to The Steel Index.

Copper futures in New York gained 0.8 percent in after- hours trading to the highest level since Aug. 28, 2008. Prices also rose on speculation a mine strike will disrupt supplies from Chile, the world’s largest producer. Crude oil added 0.5 percent today, taking a seven-day advance to 8.1 percent.

“It’s nice to see the market surging across the line, as opposed to staggering,” said Ben Potter, a research analyst at IG Markets in Melbourne. “Investor sentiment across Asia heading into 2010 is cautiously optimistic. There seems to be a general view that the economic recovery is still on track.

Qantas Airways rose 2.4 percent to A$3. International air travel rose 2.1 percent last month from a year earlier, the International Air Transport Association said yesterday in an e- mailed statement. Freight demand jumped 9.5 percent.

“The improvement trends for both passenger and freight are being exaggerated by the sharp fall in demand experienced during the second half of 2008,” IATA said.