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target price lifted to $78 Australian Stocks Advance, Led by BHP and Rio Tinto on Metals
Jan. 19 (Bloomberg) --

Australian stocks rose, rebounding from its biggest one-day drop in almost three months. BHP Billiton and Rio Tinto Group rose to records after metals prices rose in London, and as Merrill Lynch & Co. lifted its estimate for Rio's shares.

The S&P/ASX 200 Index added 54.0, or 1.1 percent, to 4840.9 at the 4:15 p.m. close in Sydney. About three times as many stocks rose as fell. The gauge is 0.5 percent from a record high, set Jan. 17.

Yesterday the index slid 1.6 percent, its biggest drop since Oct. 19, after Zinifex Ltd., the world's second-biggest zinc producer, said increased costs will erode profits.

``There's a rebound happening in the resources sector today after higher metals prices overnight,'' said Kim Ivey, who manages the equivalent of $89 million at Vertex Capital Management, a Sydney-based hedge fund. ``We sold Zinifex yesterday, but there's still some time left for the big diversified miners like BHP.''

New Zealand's NZX 50 Index added 0.9 percent to 3358.9 at the 5 p.m. close in Wellington.

BHP, the world's biggest mining company, climbed 72 cents, or 3 percent, to A$24.45. It fell 1 percent yesterday. Rio Tinto Group, the third-biggest miner, rose A$2.25, or 3.2 percent, to A$72.50. Rio yesterday slid 2.4 percent.

Zinc rose 1.6 percent to a record on the London Metal Exchange. Lead climbed 1 percent after earlier reaching an all- time high.

Merrill Lynch & Co. analysts raised their 12-month share- price estimate for Rio by 18 percent on expectations of a cash return to investors and higher iron ore prices.

London-based Rio's Australian stock could reach A$78 ($58) a share, analysts led by Vicky Binns said in a note to clients. The shares touched a record A$71.94 on Jan. 17.

The S&P/ASX 200 Index's futures contract for March rose 1.2 percent to 4820. The broader All Ordinaries Index added 1.1 percent to 4790.9.