FMG Fortescue Ltd

   By Robb M. Stewart 
 

MELBOURNE--Australian shares neared a 2016 high on Thursday, as a continued recovery by the major banks helped drive the market to a sixth straight gain and offset weakness in resources stocks.

The local market edged higher after news the economy created more full-time jobs in June, even as unemployment ticked higher to 5.8%.

Sentiment has perked up in recent sessions after last week's slide in the wake of Britain's vote to exit the European Union, in part as investors look to governments and central banks to reassure markets and provide stimulus. Some economists see room for the Reserve Bank of Australia to cut further its key cash rate from a record low 1.75%.

Closing at the highest level since Aug. 11, the S&P/ASX 200 climbed 23.1 points, or 0.4%, to 5411.6. The day's intra-session high was within a dozen points of the 5427 peak hit in late May.

It was only the second six-session push higher of 2016 for the index.

For the day, 3.09 billion shares worth 4.84 billion Australian dollars (US$3.68 billion) were traded, Commonwealth Securities said.

The four largest banks added more than 12 points to the ASX 200 index, as their shares each climbed for a fourth day running. National Australia Bank led banking stocks, rising 1.3%, while Commonwealth Bank of Australia, Westpac Banking and Australia & New Zealand Banking Group each added 1%.

Investors appeared to have largely shrugged off a report by Moody's Investors Service that cautioned headwinds were mounting for the big banks and their ability to preserve margins could be challenged by a prolonged period of low interest rates. Bank shares came under pressure last week when the prudential regulator said the major banks would likely need to raise additional capital and Standard & Poor's revised the outlook on their "AA-" ratings to negative to reflect a similar move on the country's sovereign rating.

Most other industry sectors were higher Thursday, although the energy and materials subindexes faltered after oil and iron-ore prices retreated.

Woodside Petroleum slipped 1.1%, Oil Search fell 0.1% and Santos lost 1%.

BHP Billiton and Rio Tinto were down 1.2% and 1.1%, respectively, and iron-ore miner Fortescue Metals Group was 4.1% weaker.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

July 14, 2016 03:33 ET (07:33 GMT)

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