RTTNews - Riding on positive cues from Wall Street, the Australian stock market opened on a firm note Friday with energy and materials stocks leading the charge. A fair amount of buying is seen in industrials and utilities stocks as well.

The benchmark index S&P/ASX 200 is currently trading at 3,998.10, up 63.50 points over its previous close. The All Ordinaries index is up 60.30 points at 3,992.80.

The Australian market had ended sharply lower on Thursday with the benchmark S&P/ASX 200 closing lower by 82.60 points, or 2.06%, to 3,934.60. The broader All Ordinaries index had drifted down by 76.80 points, or 1.92%, to 3,932.50.

Rio Tinto is in a trading halt as the market awaits an announcement about the status of its planned deal with Chinese company Chinalco. The announcement of the trading halt before market open on Friday said it would remain in place pending the release of an announcement by the company''. Reports overnight from London and Beijing said the $US20 billion deal between Rio and Chinalco had fallen apart.

Meanwhile, Rio Tinto and BHP Billiton have signed a non-binding agreement to establish a production joint venture covering the entirety of both companies' Western Australian iron ore assets. The JV will encompass all current and future Western Australian iron ore assets and liabilities and will be owned 50:50 by BHP Billiton and Rio Tinto. The BHP Billiton stock is up by over 5.5% now.

Norton Gold Fields Ltd has commenced development of underground operations at its Paddington open-cut gold mine near Kalgoorlie, Western Australia. The miner on Friday blasted a portal at the bottom of the Paddington pit, beginning the underground decline that opens up the new operations dubbed Homestead. The stock is currently trading higher by as much as 12.5%.

Shares of Fortescue Metals Group are up sharply by 18% following the company signing a deal with BC Iron Limited for a possible joint venture to develop BC Iron's Nullagine Iron Ore Project in the East Pilbara. FMG can earn a 50% interest by meeting its joint venture obligations.

Among bank stocks, Commonwealth Bank of Australia is up by 2.2% while Westpac and National Australia Bank are up by 1.5% each. However, ANZ Bank is down in the red with a modest loss.

In economic news, according to a survey of 200 firms by Australia Industry Group and the Housing Industry Association, activity in Australia's construction industry contracted at the slowest pace in 14 months in May, as firms saw an improvement in all sectors from housing to engineering along with a pick-up in new orders and jobs. Its main measure of activity jumped 10.4 points to 46.9, still short of the 50 boundary between contraction and growth, but the best reading for 14 months.

The index for housing climbed 15.6 points to 45.4 in May, while that for apartment building rose 14.7 points to 48.4. The measure of engineering activity gained 13.6 points to 50.7, putting it just back into growth territory. The survey's measure of new orders rose 14.5 points to 47.2, while employment increased by 5.3 to 45.5.

The results echoed a survey of manufacturing out earlier in the week that also showed an improvement in May.

In the currency market, the Australian dollar is trading at 0.8023 to the U.S. dollar.

Among other markets in the Asia-Pacific region, New Zealand, Japan and Korea are trading firm with modest gains.

On Thursday, stock prices surged higher on Wall Street after an uncertain start. A highly encouraging report from the Labor Department that showed a decrease in first time jobless claims for the week ended May 30th and the first decrease in continuing claims in twenty weeks kept the mood fairly positive.

The major averages saw good upside in late session trading and closed just off of their best levels of the day. The Dow climbed 74.96 points or 0.9 percent to 8,750.24, the Nasdaq finished up 24.10 points or 1.3 percent at 1,850.02 and the S&P 500 closed up 10.70 points or 1.1 percent at 942.46.

In the Asia-Pacific region, markets finished modestly lower on Thursday. Japan's benchmark Nikkei 225 Index slipped by 0.8 percent, while Hong Kong's Hang Seng fell by 0.4 percent.

Major European markets finished modestly higher. The U.K.'s FTSE 100 Index closed up by 0.8 percent, while the French CAC 40 Index and the German DAX Index finished up by 0.1 percent and 0.2 percent, respectively.

Crude oil surged again on Thursday, boosted by an encouraging outlook from Goldman Sachs. Earlier, oil moved to within 40 cents of the key US$70 a barrel mark. Light sweet crude rallied to US$68.81 per barrel, up US$2.69 on the session. Oil hit a multi-month intraday high of US$69.60 earlier in the day.

Goldman Sachs raised its year-end forecast for crude oil to US$85 per barrel, up from the prior expectation of US$65 per barrel. The firm also indicated it no longer expects another drop before a rally.

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